Alphabet's revenues rise 15% to $80.5 billion

On Thursday, Alphabet, Google's parent company, reported strong revenue growth in its latest quarter from its search engine and video platform, YouTube, as its market-leading position in online advertising continued to reap rewards despite the recent fluctuations in the industry.

Alphabet reported quarterly sales of $80.5 billion, up 15% from a year earlier and above analysts' estimate of $78.8 billion. Profit rose 36% to $23.7 billion. Analysts expected $18.9 billion.

Alphabet announced that for the first time it will give shareholders a dividend of 20 cents per share, to be paid on June 17. The company's board of directors also approved a $70 billion stock repurchase program. Alphabet shares rallied 13% in after-hours trading.

The digital advertising industry has had its ups and downs over the past couple of years. In 2022, inflation and higher interest rates have made advertisers more reluctant to spend, a blow to Google and its competitors like Meta, the owner of Facebook and Instagram. Google's search engine has proven highly resilient to the fluctuations that have occurred since then, underscoring its role as a gateway to the Internet for billions of people.

Alphabet continues to print tens of billions of dollars in advertising profits each year and has used its funds to finance an aggressive push into generative artificial intelligence as part of a growing race with Microsoft and OpenAI, the maker of the ChatGPT chatbot. Alphabet said it spent $11.9 billion on research and development in the first three months of this year, an increase of 4%.

Over the past year, Google has incorporated artificial intelligence into nearly every aspect of its product portfolio, answering some user questions in the search engine, helping content creators make YouTube videos, and suggesting ways to get started writing on Google Docs.

But the company's AI ambitions suffered a major setback in the first quarter. In February, users realized that Google's Gemini chatbot was creating images of people that weren't always historically accurate, depicting the founding fathers of the United States and World War II German soldiers as multiracial and the women as past popes . He also refused to produce images of white people. Internet users expressed outrage on social media.

Google executives promised to fix the problem and in the meantime suspended the chatbot's ability to generate images of people.

In Thursday's earnings report, the company gave little indication that the chatbot, which has free and paid versions, had taken off as a business. Sundar Pichai, Google's chief executive, said in a statement that the company is “well underway with our Gemini era.”

To continue paying for Gemini and other AI products, Alphabet has tried to cut costs, including by laying off workers. Since the beginning of the year, it has laid off employees across many of its business units, including YouTube, finance and its main engineering division.

As of March 31, Alphabet had 180,895 employees, down slightly from 182,502 three months earlier, but down nearly 10,000 from a year earlier. At the end of 2019, the company's workforce stood at 119,000 people, before it began a hiring spree during the pandemic when it saw a surge in usage of its online services.

In the first quarter, advertising sales on YouTube, Google's video platform, rose 21% to $8 billion, above the $7.7 billion expected by analysts.

Google Cloud, the company's unit that rents software and computing services to other companies, reported sales that rose 28% to $9.6 billion. Analysts had estimated $9.4 billion.

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