Introduction
The latest news about Alphabet, the parent company of Google, shows an impressive profit increase of 46 percent to $34.54 billion in the first quarter of 2025. This increase is mainly attributed to the company’s strong advertising business, which continues to grow despite competition from Artificial Intelligence (AI). Revenues from online ads rose by 8.5 percent to $66.89 billion, surpassing analysts’ expectations. Additionally, Alphabet announced additional distributions in the double-digit billion range, positively influencing stock prices and leading to a 5.5 percent increase in after-hours trading.
Background and Market Developments
- Advertising Business: Alphabet benefits significantly from its advertising business, which accounts for about three-quarters of the company’s revenue. Revenues from online ads rose by 8.5 percent, higher than the expected 7.7 percent.
- Artificial Intelligence (AI): Despite increasing competition from AI applications, Alphabet’s advertising business remains strong. The use of AI to improve search results could continue to contribute to growth.
- Cloud Business: Although the cloud business grew by 28 percent, it narrowly missed market expectations with $12.26 billion.
- Market Reaction: The positive quarterly figures led to a 5.5 percent increase in Alphabet’s shares in after-hours trading.
Outlook for Investors
Alphabet’s strong performance in the first quarter of 2025 may signal to investors that the company remains a key player in the technology sector. The “Magnificent Seven” (Alphabet, Microsoft, Apple, Meta, Amazon, Nvidia, and Tesla) are expected to have an average profit growth of 15.9 percent in 2025, although this is lower than in the previous year. Nevertheless, Alphabet remains an attractive investment for investors due to its strong advertising business and positive market developments.
Summary
Alphabet’s profit increase is mainly due to the strong advertising business, which continues to grow despite competition from AI. The positive quarterly figures and planned distributions have positively influenced stock prices. Investors should keep an eye on further developments in the technology sector and Alphabet’s role therein.