Alphabet Stock Soars Following Massive Buyback

Alphabet, the parent company of Google, had a great day for its stock on Thursday after a rough time for tech shares. The reason for the surge? The company announced that it will be giving billions of dollars to investors.

The tech giant declared its first quarterly cash dividend, revealing that it will be paying $0.20 per share on June 17 to shareholders of record as of June 10. Additionally, Alphabet also announced a $70 billion share buyback plan. Buybacks and dividends are ways to reward investors with cash for holding the stock, which can help boost stock prices. However, these actions are often criticized for artificially inflating stock prices without investing in employees or the business itself.

Google's stock soared by as much as 13% in after-hours trading after the latest report was released. This announcement was made as part of Google's earnings report for the first quarter of the year. In the report, Google revealed that it had surpassed the expectations of Wall Street analysts in terms of both sales and profits.

Meta headquarters pictured on February 02, 2023 in Menlo Park, California.

Meta headquarters pictured on February 02, 2023 in Menlo Park, California.

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Meta's stock took a 15% dive due to its ambitious AI spending plans. Revenue for the quarter exceeded $80.5 billion, a 15% increase from the previous year, surpassing analysts' expectations of $78.75 billion, according to FactSet estimates. Additionally, the company saw a 57% growth in profits, reaching almost $23.7 billion compared to the previous year.

Alphabet CEO Sundar Pichai credited the company's success to their investments in artificial intelligence, specifically mentioning the large language model and suite of AI products known as Gemini.

Pichai expressed excitement about the progress made during the Gemini era, highlighting the momentum seen throughout the company. He emphasized Alphabet's strong position in AI research and infrastructure, as well as their global product reach, which sets them up for future AI innovations.

Google's recent success in the market shows how investors are recognizing the importance of artificial intelligence in the tech industry. Many believe that AI is the future of this sector.

During a call with analysts after the report last Thursday, Pichai mentioned that Google has identified ways to make money from AI, such as through ads, cloud services, and subscriptions.

Not every company has been able to assure investors that they are handling AI investments responsibly. Meta's shares dropped on Thursday when the company increased its annual spending forecast to support its AI goals, even though its earnings report on Wednesday was better than expected.

However, the positive tech earnings reports from multiple companies on Thursday helped boost tech stocks, including Google.

Snap, the parent company of social media platform Snapchat, had a successful first quarter with earnings that exceeded Wall Street's expectations. As a result, the company's stock rose in after-hours trading.

Snap's revenue for the first quarter of the year reached approximately $1.19 billion, showing a 21% increase from the same period last year. Additionally, the company noted a 10% growth in daily active users compared to the previous year. Moreover, Snap provided a positive outlook for the current quarter, exceeding expectations.

Despite reporting a net loss of $305 million for the March quarter, Snap has been focused on enhancing its advertising technology and offerings, as well as implementing cost-cutting measures through restructuring. The company's financial performance showed improvement from the previous year's loss and surpassed analysts' predictions.

Snap shares soared roughly 25% in after-hours trading immediately following the report.

CNN’s Catherine Thorbecke contributed to this report.

Editor's P/S:

The recent surge in Alphabet's stock is a testament to the growing importance of artificial intelligence in the tech industry. Investors are recognizing the potential of AI to transform various sectors, and Google's strong position in this field is seen as a major advantage. The company's investments in AI, such as its large language model and Gemini suite of products, are paying off, as evidenced by its impressive financial performance in the first quarter.

However, it's important to note that not all companies are handling AI investments responsibly. Meta's stock decline shows that investors are concerned about the company's ambitious spending plans in this area. Google, on the other hand, has a proven track record of innovation and a strong balance sheet, which gives investors confidence in its ability to capitalize on the opportunities presented by AI.