Alphabet, the parent company of Google, made a remarkable recovery after a challenging day for tech shares, with its stock surging following the announcement of its first quarterly cash dividend and a $70 billion share buyback. The dividend of $0.20 per share will be paid on June 17 to shareholders of record as of June 10. While buybacks and dividends can boost stock prices, they are often criticized for artificially inflating stock values without investing in employees or business improvements.
Google's stock soared by as much as 13% in after-hours trading after the earnings report revealed revenue exceeding $80.5 billion for the first quarter, a 15% increase from the previous year. Profits also saw a substantial 57% year-over-year growth, reaching nearly $23.7 billion. CEO Sundar Pichai credited the company's success to investments in artificial intelligence, particularly highlighting the Gemini AI products and the company's leadership in AI research and infrastructure.
Investors are increasingly rewarding tech companies for their AI investments, viewing AI as the future of the sector. Google's clear paths to AI monetization through ads, cloud services, and subscriptions were well-received by analysts during the earnings call.
Other tech companies also reported positive earnings on Thursday, contributing to a market turnaround. Snap, the parent company of Snapchat, reported revenue of $1.19 billion for the first quarter, a 21% increase from the previous year, with a 10% growth in daily active users. Snap's focus on improving advertising technology and cost-cutting measures led to a better-than-expected outlook, resulting in a 25% surge in after-hours trading.
Microsoft reported quarterly profits of $21.9 billion, up from $18.3 billion a year ago, with revenue growing 17% year-over-year to $61.9 billion. CEO Satya Nadella highlighted the success of Microsoft's AI services, particularly mentioning Copilot and Copilot stack driving AI transformation. Microsoft shares climbed over 4% in after-hours trading, showcasing the company's value in infusing AI intelligence across its portfolio, from cloud services to desktop products.
Microsoft's Azure cloud business also experienced significant growth, with revenue increasing by 31%, propelled by AI advancements.
