Google parent Alphabet Inc. reported first-quarter results that exceeded analysts’ estimates, demonstrating that its search advertising business is still weathering the economic downturn and rising competitive threats.
Sales excluding partner payments were $58.07 billion in the quarter, the company said in a statement on Tuesday. It topped analysts’ estimates of $56.98 billion. Shares went up.
Google continues to outperform its competitors as economic pressures force advertisers to reduce their spending. Search advertising has generally been more resistant to ups and downs in the economy than spending on social media, where competitors such as Facebook parent Meta Platforms Inc and Snap Inc have seen a more dramatic decline in demand.
The company’s closely watched cloud unit also made money, posting a profit of $191 million for the first time. Alphabet said in a note to investors ahead of results that it has shifted reporting of certain costs google cloud for google services.
“We are pleased with our business performance in the first quarter, driven by improved performance and momentum in the cloud,” said the chief executive officer. sundar pichai said in a statement. The company also authorized share buybacks of up to $70 billion.
Alphabet’s leadership has been waging a cost-cutting campaign to preserve the company’s profit margins as advertisers slash their budgets. Net income was $15 billion, or $1.17 per share, compared to Wall Street’s $1.09-per-share estimate.
Investors have also expressed concern that Google’s long-dominant search advertising business could become newly vulnerable in the form of conversational AI products like OpenAI. chatgpt, which is being displayed by Microsoft Corp’s Bing search, win over more users. Yet the search advertising portion of Google’s business grew at a healthy clip this quarter, potentially allaying those concerns for now.
“Search performance will serve as an early indicator of Google’s ability to maintain its dominance in the sector responsible for most of its revenue,” Evelyn Mitchell, a senior analyst at Insider Intelligence, wrote in a note.
Alphabet shares rose as much as 5.9% after closing at $103.85. The stock is up 17.7% so far this year.
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