Alphabet (GOOGL) saw its shares soar nearly 16% in after-hours trading Thursday after the Google owner reported better-than-expected top and bottom lines for the fiscal Q1 2024.
Specifically, the tech behemoth posted earnings per share (EPS) of $1.89, topping the consensus estimates of $1.51. Revenue was reported at $80.54 billion, also above the projected $78.71 billion.
Operating income for the quarter increased by 46% year-over-year to $25.5 billion, while net income soared to $58 billion, or $1.89 per diluted share.
Moreover, Alphabet announced its first-ever dividend of 20 cents per share, marking a significant return of capital at a time when the company is investing heavily in data centers to enhance its capabilities in generative AI.
Analysts at Investing.com said Alphabet’s (NASDAQ:GOOGL) announced dividends and solid Q1 print “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.”
“At a time when companies need investment capital more than ever amid the growing arms race in the AI space and financing difficulties due to the repricing of interest rate expectations, this well-timed use of the company's cash pile may put it a couple of steps ahead of the competition in the innovation space at a pivotal moment,” they wrote.
Importantly, the tech giant’s top and bottom lines underscored that Alphabet CEO Sundar Pichai’s focus on improving efficiency “is putting the company on the correct path while others (see Meta, for example) are struggling to keep margins at positive levels,” the analysts noted.
“While Microsoft's earnings - out just now - still leave the Redmond-based company way ahead of the competition, Google's renewed investor optimism and positive cash flows should be a driver of substantial innovation growth in the months ahead,” they said.