Alphabet (NASDAQ:GOOGL) saw its shares jump more than 11% in premarket trading Friday after the Google owner reported better-than-expected top and bottom lines for the fiscal Q1 2024.
Alphabet's shares hit an indicated record high of more than $174.
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.
"We expect the market to have a positive reaction to Alphabet’s Q1'24 earnings report," Goldman Sachs analysts said in a client note.
Alphabet also 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.
Moreover, the Board authorized a new $70bn share repurchase program.
"In tandem, we view both actions as demonstrating Alphabet’s continued commitment to capital returns (alongside key long-term investments, especially in AI initiatives)," Goldman added.
Also in the aftermath of the report, analysts at BMO Capital Markets said they see Alphabet "as one of the best-positioned AI competitors."
"1Q24 highlighted effective monetization of the new GenAI platform shift. Search & Other, YouTube Ads, and Google Cloud exceeded our growth expectations by 260bps, 720bps, and 190bps, respectively, attributable primarily to GenAI products," they noted.
Meanwhile, analysts at Bernstein reiterated a Market Perform on GOOGL but lifted their target price from $165 to $180. They also upped their EPS estimates for 2024 and 2025 fiscal years to $7.4 and $8.5, respectively.
"For the past 18 months, Google has faced near-constant critique around the inevitable AI-led disruption to search, a string of PR missteps that questioned whether Google was too far behind in AI or too “woke” to make it, and of course a management team that’s too slow and too soft to make the hard cuts," Bernstein's team wrote.
"And through it all Google’s stock somehow clawed its’ way to all-time highs heading into 1Q24 earnings. Google needed to be perfect, or face a repeat of being penalized for micro-misses. It was perfect," they commented.