Sifting Through Trade Tensions: Gerri Willis Talks Alphabet's Q1 Earnings
Alphabet's parent company repurchases shares and prolongs dividends, surpassing earnings estimates.
In a discussion on the effects of trade policy remolding on the global trading system, financial analysts Gerri Willis and John Carney break it down.
Google's parent company Alphabet declared a massive share buyback worth $70 billion and a 5% dividend rise as they surpassed Wall Street estimates in their Q1 earnings on Thursday. The stock price leaped by 4%, adding approximately $75 billion to its market value in after-hours trading.
Alphabet's earnings exceeded forecasts, owing to robust growth in their digital advertising sector, a steadfast performer that offset the sluggish growth in the cloud computing division.
Meanwhile, 3M beat Q1 estimates but flagged potential tariff impacts on 2025 profits.
Market uncertainties have arisen due to US President Donald Trump's trade policy, fueling apprehensions of an economic downturn. Yet, the digital ad market managed to hold its ground during the first quarter, according to analysts.
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Revenue generated by Google's cornerstone ad business—accounting for 75% of the firm's overall earnings—grew by 8.5%, amounting to $66.89 billion for the quarter. Despite this growth slowing from the previous quarter's 10.6% increase, it still surpassed analysts' estimations for a 7.7% expansion.
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| Ticker | Security | Last | Change | Change % ||--------|-------------|------|--------|----------|| GOOGL| ALPHABET INC. | 159.28 | 3.93 | 2.53% || Powered By |
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Google Cloud recorded a 28% revenue surge to $12.26 billion, taking a slight dip from the 30.1% increase in the prior quarter. The unit was expected to report revenue of $12.27 billion, as per data compiled by LSEG.
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The company reported total revenue of $90.23 billion for the first quarter, surpassing the average analyst estimate of $89.12 billion, as per LSEG's data compilation.
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The Q1 net income reached $34.54 billion, surpassing predictions of $24.85 billion.
While the Trump administration's trade policies have raised eyebrows due to potential economic downturns, brands have employed "commitment-free" approaches to preserve flexibility by scrutinizing costs and reducing programmatic ad spending. This is owing to increased competition and costs arising from tariff-related operational budget hikes for brands, leading to reduced ad budgets and higher cost-per-acquisition (CPA) rates.
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Despite these challenges, Google's robust digital ad ecosystem remains a significant buffer, cushioning the impact of any potential ad spending contraction. However, escalating trade tensions and potential retaliatory measures could present future threats to Google's ad business and overall market growth.
- Alphabet's robust digital advertising sector, a key contributor to their overall earnings, surpassed Wall Street estimates, driven by an 8.5% growth in Google's cornerstone ad business.
- In a departure from Google, 3M beat Q1 estimates but signaled potential tariff impacts on 2025 profits, adding to market uncertainties.
- Despite US President Donald Trump's trade policy fueling apprehensions of an economic downturn, the digital ad market held its ground during the first quarter, according to analysts.
- Google's total revenue for Q1 was reported at $90.23 billion, surpassing the average analyst estimate, with the stock price leaping by 4% in after-hours trading.
- Brands are employing commitment-free strategies, scrutinizing costs and reducing programmatic ad spending due to increased competition and costs arising from tariff-related operational budget hikes, leading to reduced ad budgets and higher cost-per-acquisition rates.
