Alphabet, the parent company of Google, has delivered a powerful message to investors: its massive investments in artificial intelligence (AI) are paying off — and then some.
In its first-quarter earnings report released Thursday, Alphabet revealed stronger-than-expected profits and revenues, largely driven by solid ad sales and a bullish stance on AI infrastructure. The company also announced a massive $70 billion stock buyback, which helped boost its stock price by 4% in after-hours trading, adding a whopping $75 billion to its market value.
Despite concerns around global economic uncertainty and trade tensions between the U.S. and China, Alphabet remained confident in its vision for AI. It reaffirmed plans to continue investing heavily in AI infrastructure, including data centers and next-gen hardware — sticking to its $75 billion capital expenditure guidance for 2025.
This news sent a ripple effect through the tech sector, boosting the shares of Meta and Amazon, whose investors are also hoping for strong AI-led growth stories.
Alphabet CEO Sundar Pichai highlighted how AI integration is transforming Google’s search and ad capabilities. Features like “AI Overviews” — concise summaries that appear above traditional search results — now serve over 1.5 billion users monthly. Google also recently introduced an AI-only search mode, allowing for even smarter, context-driven answers.
The company’s core ad business, which accounts for nearly 75% of total revenue, brought in $66.89 billion in Q1 — an 8.5% increase year-over-year. Although that’s slightly slower than last quarter’s 10.6% growth, it beat analyst expectations of 7.7%.
“We continue to see strong interest from advertisers in our AI-powered tools, which are improving campaign effectiveness and return on ad spend,” said Philipp Schindler, Google’s Chief Business Officer. Still, he acknowledged headwinds from geopolitical factors and regulatory changes, including former President Donald Trump’s recent move to end the “de minimis” exemption for duty-free imports — a policy that could impact ad spend from Asia-Pacific retailers.
Some of Google’s biggest ad clients, including fast-rising Chinese e-commerce platforms like Temu and Shein, have already begun cutting their U.S. digital advertising budgets, a trend that could ripple across other platforms like Meta as well.
Meanwhile, Google Cloud posted revenues of $12.26 billion, up 28% from the same period last year. While that’s slightly below analyst expectations, it still marks a strong showing amid tightening corporate IT budgets.
Alphabet reported total Q1 revenue of $90.23 billion, exceeding Wall Street’s estimate of $89.12 billion. Its profit surged to $2.81 per share, far above forecasts of $2.01. To sweeten the deal for investors, the company announced a 5% increase in its dividend, now set at 21 cents per share.
All signs suggest Alphabet is doubling down on its AI future — and Wall Street is taking notice.
