Google parent Alphabet (GOOG, GOOGL) gained 11% in morning trading on Friday, following standout quarterly results that beat revenue and earnings estimates and stoked investor excitement with the announcement of a cash dividend program of $0.20 per share.
The board of directors also approved stock repurchases of up to an additional $70 billion.
“Our results in the first quarter reflect strong performance from Search, YouTube and Cloud,” said CEO Sundar Pichai in a statement on Thursday. “Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation.”
Revenue, excluding traffic acquisition costs, rose 16% from the same period last year to $67.59 billion, beating analyst expectations of $66.07 billion, per Bloomberg data. The company reported adjusted earnings per share of $1.89 versus consensus estimates of $1.53.
In artificial intelligence, Google has widely been seen as playing catch up to Microsoft (MSFT), which was among the first in the tech world to reap the cultural excitement around consumer AI chatbots. Microsoft invested in OpenAI, the company behind the popular ChatGPT.
But Google executives emphasized during the earnings call Thursday that the company is well positioned to lead the shift to an AI-centric tech world, and that it is committed to investments that will fuel the development of new models.
Pichai said the company has clear paths to monetize AI breakthroughs through advertising, cloud, and subscriptions.
He also touted the integration of AI tools into Google search, which allows users to ask more complex and descriptive questions.
But how AI will influence Google’s search business remains unclear, since new AI-based interfaces might displace traditional search and change the way users interact with the Web.
Investors are also wary of the costs associated with AI versus the return. Alphabet’s report arrived a day after its advertising rival and Big Tech peer Meta (META) noted that expenses for the year are growing and that it will take some time before AI investments generate significant revenue. The comments helped send Meta shares tumbling more than 10%.
Alphabet reported capital expenditures for the quarter of $12 billion, mostly tied to servers and data centers. CFO Ruth Porat said during the call that the quarters ahead will register similar levels of spending, which reflects the company’s confidence in its AI investments.
For the second straight quarter, cloud revenue rose nearly 30% from the year-earlier period to surpass $9 billion.
Google has been working to claim additional share of the cloud market, where it currently sits in third place behind rivals Amazon (AMZN) and Microsoft.
Ad revenue, the heart of Google’s business, rose by 13%, registering $61.66 billion.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.
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