Investing.com - Shares in Alphabet (NASDAQ:GOOGL) jumped in early U.S. trading on Friday after the Google parent reported better-than-anticipated first-quarter income and backed its heavy artificial intelligence spending plans despite ongoing tariff-fueled economic turbulence.
Operating income at the search giant came in at $30.6 billion during the period, well above analysts forecasts, while group-wide revenue was broadly in line with expectations.
Capital expenditures increased to an all-time peak of $17.2 billion, as the company reiterated its objective to invest $75 billion this year in a bid to enhance its AI capabilities. Questions have recently swirled around such massive spending by Google and many of its mega-cap tech peers following the emergence of a competitive, low-cost AI model from Chinese start-up DeepSeek.
Meanwhile, executives said it was too early to comment on the effect -- if any -- of Trump’s elevated tariffs. While Google’s operations do not stand to take a direct hit from the levies, many of the businesses that spend money on its advertising and cloud platforms could be impacted.
"Importantly, management did not call out any signs of a softening ad backdrop quarter-to-date through April, likely tempering some investor concern in the near-term," analysts at Wedbush said in a note to clients.
Firms have flagged that the widespread uncertainty around the tariffs is making it more difficult to plan for the future, leading some analysts to predict that these companies could rein in their marketing budgets.
For the three months ended on March 31, Alphabet reported earnings of $2.81 per share on revenue of $90.23 billion.
Google search and other revenue, which is exposed to competition for advertising dollars from generative AI, rose to $50.7 billion from $46.16 billion a year earlier. Wall Street estimates had called for $50.5 billion.
"Search saw continued strong growth, boosted by the engagement we’re seeing with features like AI Overviews, which now has 1.5 billion users per month," the company said.
Cloud revenue increased to $12.26 billion, up from $9.57 billion a year ago and roughly meeting estimates.
YouTube ads revenue climbed to $8.93 billion from $8.09 billion.
(Yasin Ebrahim contributed reporting.)