Alphabetannounced its first-ever dividend on Thursday and a $70 billion stock buyback, cheering investors who sent the stock surging nearly 16% after the bell.
The Google parent is returning capital while spending billions of dollars on data centers to catch up with rivals on generative artificial intelligence. The dividend will be 20 cents per share.
Just three months ago, Alphabet’s Big Tech rival, Meta Platforms, announced its own first-ever dividend, a move that lifted the social media company’s stock market value by $196 billion the following day. Amazon remains the lone holdout among Big Tech firms not offering a dividend.
Alphabet beat expectations for the quarter in sales, profit and advertising – metrics that are all closely watched.
“Alphabet’s announced dividend payouts and buybacks on top of the solid earnings beat are not only a breath of fresh air for the tech market as a whole, but also a very intelligent strategy for the search engine giant going into a tough time of the year,” said Thomas Monteiro, senior analyst at Investing.com.
Alphabet’s after-hours share surge of nearly 16% following the report increased its stock market value by about $300 billion to over $2 trillion.
In a call to discuss results, CEO Sundar Pichai touted Google’s AI offerings as a boon to its core search results. “We are encouraged that we are seeing an increase in search usage among people who are using the AI overviews,” he said.
Revenue was $80.54 billion for the quarter ended March 31, compared with estimates of $78.59 billion, according to LSEG data.
The search firm’s beat on first-quarter revenue was powered by rising demand for its cloud services on the back of increasing adoption of artificial intelligence and steady advertising spending.
Google reported advertising sales rose 13% in the quarter to $61.7 billion. That compares with the average estimate of $60.2 billion, according to LSEG data.
Alphabet is coming off a fourth quarter in which ad sales missed the mark, sending shares tumbling, amid rising competition from Amazon, Facebook and new entrants like TikTok. The latter faces an uncertain future after President Biden signed a bill that would ban the popular app if it is not sold within the next nine to 12 months.
Meanwhile, Google Cloud revenue grew 28% in the first quarter, boosted by a boom in generative AI tools that rely on cloud services to deliver the technology to customers.
Alphabet’s capital expenditures were $12 billion, a 91% rise from a year prior, a figure Gabelli Funds portfolio manager Hanna Howard called “higher than anticipated.”
Still, CFO Ruth Porat said on the call with analysts that she expects such expenditures to be at that level or higher throughout the remainder of the year, as the company spends to build artificial-intelligence offerings.
Despite the surge in capital expenditures, Porat said operating margin in 2024 would be higher than last year, without elaborating.
Google’s cloud services are attractive for venture capital-backed startups developing generative AI technologies due to their pricing and ease of integration with other tools, investors and experts have previously said.
Google has touted its AI-powered chatbot, Gemini, as a panacea for automation, from coding to document creation. The software was widely criticized, however, after it was found to generate historically inaccurate images, including of former US leaders and World War Two-era German soldiers.
Google has said it is aware of the issues and is working to address them.
The national inquiry into grooming gangs will leave “no hiding place” for those involved in the scandal, the home secretary has warned.
Shabana Mahmood’s vow comes amid accusations the inquiry is “descending into chaos” – with Home Office minister Jess Phillips being accused of a “lie” for disputing allegations that the inquiry is being diluted.
Three survivors have resigned from its liaison panel in recent days over concerns about how the process is being handled, while a frontrunner to chair the inquiry has also pulled out.
Image: Home Office minister Jess Phillips. Pic: PA
While Ms Mahmood acknowledged there are frustrations about the pace of progress towards launching the inquiry – which had been announced back in June – she said its scope “will not change”.
In an article for The Times, she vowed the probe “will never be watered down on my watch” – and said it will focus on how “some of the most vulnerable people in this country” were abused “at the hands of predatory monsters”.
“In time, we came to know this as the ‘grooming gangs’ scandal, though I have never thought the name matched the scale of the evil. We must call them what they were: evil child rapists,” Ms Mahmood wrote.
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3:18
Grooming gangs victim speaks out
Fiona Goddard resigned from the liaison panel after citing a “toxic, fearful environment” and “condescending and controlling language” used towards survivors.
Ellie Reynolds also quit – saying the “final turning point” was the “push to widen the remit of the national inquiry in ways that downplay the racial and religious motivations behind our abuse”.
A third known as Elizabeth – which is not her real name – followed yesterday afternoon.
Ms Mahmood said “the door will always remain open to them” if they decide to return to the liaison panel.
“But even if they do not, I owe it to them – and the country – to answer some of the concerns that they have raised,” she added.
The home secretary also insisted the inquiry will be “robust and rigorous” – with the power to compel witnesses, and examine the ethnicity and religion of the offenders.
‘Fearful environment’
Some of their fears centred around the perceived prospect of the inquiry being diluted by broadening its scope beyond group-based sexual abuse, and pushes for it to have a regional focus rather than it being truly national.
Ms Phillips, the Home Office minister, said this was “untrue”.
As well as alleging a ‘toxic, fearful environment’ within the liaison panel, Ms Goddard‘s resignation letter, which Sky News published extracts from on Monday, expressed deep reservations about the shortlisted chairs for the inquiry.
Her resignation came after Sky News revealed the two leading candidates were former police chief Jim Gamble and social worker Annie Hudson, who were due to meet the survivors panel on Tuesday, before Ms Hudson withdrew from the running.
Some survivors expressed concern that the two candidates’ backgrounds in policing and social work might lead to conflicts of interest.
With Vladimir Putin and Donald Trump’s meeting in Budapest “on hold” for now, US correspondents Martha Kelner and Mark Stone unpick the US president’s latest position on the war in Ukraine.
Martha also chats to Huffington Post journalist SV Dáte about his run-in with White House Press Secretary Karoline Leavitt.
As shows of diplomatic power go, this was a pretty good one. Here, in an industrial complex in the south of Israel that is rapidly being repurposed into a joint operations centre, America is taking centre stage.
A group walks in. At the centre is US Vice President JD Vance, flanked by omni-envoy Steve Witkoff and Jared Kushner, the president’s unofficial emissary to the Middle East and official son-in-law.
And as if to prove just how much heft there is on show, the fourth person to walk in is Admiral Brad Cooper, commander of the US’s Central Command, in charge of a bewildering number of troops and the most powerful foreign military leader in the Middle East. But in this company, he barely said a word.
Image: JD Vance. Pic: Reuters
Mr Vance was composed, enthusiastic and conciliatory. During our drive down to the complex, near the town of Kirya Gat, we had read the latest statement from Donald Trump, released on the social media platform that he owns, threatening swingeing repercussions against Hamas. “FAST, FURIOUS AND BRUTAL,” he had written.
So often the echo of the president’s words, Mr Vance struck a more nuanced tone. Yes, he said that Hamas could end up being “obliterated”, but he also offered the group some support. Since the ceasefire was signed, Hamas has repeatedly said that it cannot easily recover the bodies of all the dead hostages. Mr Vance agrees.
“This is difficult. This is not going to happen overnight,” he said. “Some of these hostages are buried under thousands of pounds of rubble. Some of the hostages, nobody even knows where they are.”
He said it would have been unwise to set a deadline, insisting “we’ve got to be a little bit flexible” and even accused Israel, along with Gulf Arab states, of “a certain amount of impatience with Hamas”.
Image: (L-R) JD Vance, US special envoy to the Middle East, Steve Witkoff, and Jared Kushner. Pic: Reuters
I asked him if his visit was as a direct result of Israel’s actions on Sunday, responding to the deaths of two soldiers with attacks that killed dozens of Palestinians.
No, said Mr Vance, it had “nothing to do with events in the past 48 hours”. Many will remain dubious – this is his first visit to Israel as vice president, and, if the timing really was coincidental, it was very fortuitous.
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2:50
Ceasefire in fragile state
Then I asked him about the future of Gaza, about whether there really could be no safeguards that Palestinians would have a significant role in the future of the enclave.
I didn’t expect a long answer – and I certainly didn’t expect him to start by saying “I don’t know the answer to that question” – but that’s what we got.
“I think that what is so cool, what’s so amazing about what these guys have done, is that we’re creating a governance structure that is very flexible to what happens on the ground in the future. We need to reconstitute Gaza. We need to reconstruct Gaza,” he said.
“We need to make sure that both the Palestinians living in Gaza but also the Israelis are able to live in some measure of security and stability. We’re doing all of those things simultaneously. And then I think once we’ve got to a point where both the Gazans and our Israeli friends can have some measure of security, then we’ll worry about what the long-term governance of Gaza is.”
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0:29
Trump says ceasefire still in place
While the words are different, and the tone is less didactic, the theme is familiar. The short-term gain is peace, while the long-term plan remains largely unaddressed and unformulated.
Work is being done on that front. Diplomatic sources tell me that the effort behind the scenes is now frenetic and wide-ranging, encompassing countries from across the region, but also way beyond.
But the questions they face are towering – who pays, who sets the rules, who enforces law, whose soldiers are the peacekeepers and what happens to all the displaced Gazans?
None of this will be easy.
Mr Vance, like Mr Trump, exudes confidence, and it has clearly inspired other leaders and their nations.
Few can doubt that Mr Trump’s iron-clad self-confidence has given life and momentum to this deal.
But that isn’t enough.
The diplomats, planners and, yes, the politicians have a lot to do.