Google parent Alphabet (GOOGL.O) has reassured tech investors that its AI investments are driving ad sales, downplaying the impact of global economic uncertainty on its business. The search giant’s first-quarter profit and revenue beat expectations, with shares rising 4% in extended trading.
Alphabet’s ad revenue growth outpaced analyst predictions, reaching $66.89 billion, a 8.5% increase from the prior quarter. Despite a slowdown in Google Cloud revenue growth to 28% from the previous quarter, analysts remain optimistic about the company’s ambitious AI build-out plans.
The integration of AI into Google search has been key to its advertising appeal, allowing advertisers to run more effective campaigns and get more return on their dollars. CEO Sundar Pichai noted that AI Overviews, summaries above traditional hyperlinks, now have 1.5 billion users per month.
The company’s defense of its aggressive AI investments comes as concerns about rising costs from tit-for-tat tariffs between the US and China have prompted some analysts to warn of tech companies pulling back on new data center commitments. However, Alphabet has reaffirmed its capex guidance for the year, offering hopes for investors in Meta (META.O) and Amazon (AMZN.O), whose shares also rose in aftermarket trading.
While the company acknowledged macroeconomic uncertainty, CEO Philipp Schindler noted that changes to de minimis exemption rules will cause a slight headwind to ad business in 2025. The impact of Trump’s trade policy on advertising has triggered worries about an economic downturn, prompting companies to rethink their spending on ads.
Source: https://www.reuters.com/business/google-parent-alphabet-beats-quarterly-revenue-estimates-2025-04-24