Google’s parent company Alphabet Inc. released a quarterly report on Thursday showing that the company is still generating double-digit revenue gains from its digital advertising empire while breaking into potentially lucrative new territory in artificial intelligence.
Results for the first three months of the year provided the latest evidence that Google has regained momentum following the pandemic after an unprecedented downturn in 2022.
In the January-March period, Alphabet’s revenue rose 15% to $80.54 billion compared to the same period last year, beating forecasts from analysts surveyed by FactSet Research. It was the Mountain View, Calif.-based company’s fourth consecutive quarter of accelerated sales growth compared to a year earlier.
Alphabet earned $23.66 billion, or $1.89 per share, up 57% from the same quarter last year. Earnings per share also beat analyst estimates that guide investors.
The company’s share price rose nearly 13% in extended trading on Thursday following the results release. This reaction was in stark contrast to how investors reacted to a report from Facebook’s parent company that covered the same quarter. Meta Platforms also reported a rise in advertising revenue but gave a disappointing outlook for the April-June period, while warning that its profits would be hurt by higher spending on AI technology.
As has been the case since the company went public 20 years ago, most of the money flowed through a digital advertising network anchored by the dominant search engine Google. Google’s advertising revenue totaled $61.66 billion in the first quarter, up 13% year over year.
Despite its continued success, Google faces dual threats that could jeopardize its future growth.
The U.S. Department of Justice is targeting its search engine with a lawsuit alleging that the company abused its power by negotiating lucrative deals with Apple and other companies to gain an unfair advantage over potential competitors, thereby hindering both innovation and to suppress competition.
After a two-month trial last fall, closing arguments are scheduled to take place next week in the largest U.S. antitrust case in a quarter, and a federal judge is expected to decide by the end of this year whether Google broke the law.
People may also no longer need to rely as much on Google’s search information to answer their questions and find other information as the artificial intelligence technology that Google, Microsoft and other industry giants are developing becomes more sophisticated. As AI gradually displaces the role that Google’s search engine has occupied over the last quarter century, Alphabet’s ad sales could also decline.