By Akash Sriram and Greg Bensinger
(Reuters) -Alphabet announced its first-ever dividend on Thursday and a $70 billion stock buybuck, news cheered by investors who sent the stock surging more than 13% after the bell.
The Google parent is returning capital while spending billions of dollars on data centers to catch up with rivals on generative artificial intelligence. The dividend will be 20 cents per share.
Alphabet shares, which had gained more than 13% this year, were trading down nearly 2% on Thursday before the release of first-quarter results. The after-market surge increased Alphabet’s market value by around $250 billion.
The search firm beat Wall Street estimates for first-quarter revenue, powered by rising demand for its cloud services on the back of increasing adoption of artificial intelligence and steady advertising spending.
Revenue was $80.54 billion for the quarter ended March 31, compared with estimates of $78.59 billion, according to LSEG data.
Google reported advertising rose 13% in the quarter to $61.7 billion. That compares with the average estimate of $60.2 billion, according to LSEG data.
Alphabet is coming off a fourth quarter in which ad sales missed the mark, sending shares tumbling, amid rising competition from Amazon.com, Facebook and new entrants like TikTok. The latter faces an uncertain future after President Joe Biden signed a bill that would ban the popular app if it is not sold within the next nine to 12 months.
Meanwhile, Google Cloud revenue grew 28% in the first quarter, boosted by a boom in generative AI tools that rely on cloud services to deliver the technology to customers.
Google’s cloud services are attractive for venture-capital backed startups developing generative AI technologies due to its pricing and ease of integration with other tools, investors and experts have previously said.
(Reporting by Akash Sriram in Bengaluru and Greg Bensigner in San FranciscoAdditional reporting by Noel Randewich in Oakland, CaliforniaEditing by Sriraj Kalluvila, Kenneth Li and Matthew Lewis)
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