Google parent Alphabet ( GOOG , GOOGL ) gained more than 11% in premarket trade on Friday, following quarterly results that beat revenue and earnings estimates and cheered investors by announcing a cash dividend plan of $0.20 per share.
The board of directors has approved share buybacks of up to an additional $70 billion.
“Our first quarter results reflect strong performance in search, YouTube and cloud,” CEO Sundar Pichai said in a statement Thursday. AI Innovation.”
Revenue, excluding traffic acquisition costs, rose 16% to $67.59 billion from the same period last year, according to Bloomberg data. The company reported adjusted earnings of $1.89 per share versus consensus estimates of $1.53.
In artificial intelligence, Google is widely seen as catching up to Microsoft ( MSFT ), which was the first in the tech world to reap the cultural excitement surrounding consumer AI chatbots. Microsoft invested in OpenAI, the company behind the popular ChatGPT.
But Google executives insisted during Thursday's earnings call that the company is poised to lead the transition to an AI-centric technology world and that it is committed to investments that will spur the development of new models.
Pichai said the company has clear paths to monetizing AI advances through advertising, cloud and subscriptions.
He also said Google is integrating AI tools with search, allowing users to ask more complex and descriptive questions.
But it's unclear how AI will affect Google's search business, as new AI-based interfaces could displace traditional search and change the way users interact with the web.
Investors are also wary of the costs and returns associated with AI. Alphabet's report comes a day after its ad rival and big tech peer Meta ( META ) said annual costs were rising and AI investments would take some time to generate significant returns. The comments sent Meta shares down more than 10%.
Alphabet posted $12 billion in capital expenditures in the quarter, mostly related to servers and data centers. CFO Ruth Porat said on the call that it will record similar spending in the coming quarters, reflecting the company's confidence in its AI investments.
In the second quarter, cloud revenue jumped nearly 30% year-over-year to more than $9 billion.
Google has been trying to gain more share of the cloud market, where it currently ranks third behind rivals Amazon ( AMZN ) and Microsoft.
Advertising revenue, the core of Google's business, rose 13% to $61.66 billion.
Hamza Shaban is a correspondent for Yahoo Finance, covering markets and economics. Follow Hamza on Twitter @hshaban.
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