GOOGL’s Astounding $20B Cloud Sales, Dividend Boost Drives Stock Higher

• Google Cloud revenues grew 63% in Q1.
• Net income increased 81%, and EPS increased 82% to $5.11, both beating expectations.
• Announced a 5% dividend boost to $0.22.

Alphabet (GOOGL, GOOG) stock gained 6% after hours after the company beat Q1 revenue and profit expectations, while strong performance in its cloud computing unit jolted investor sentiment. 

Google’s parent company reported Q1 revenue, excluding partner payouts, at $94.7 billion, compared with the $91.6 billion expected on average by analysts, according to data compiled by Fiscal.ai. The company reported earnings of  $5.11 per share, compared with Wall Street’s $2.62 estimate.

“Our AI investments and full-stack approach are lighting up every part of the business,” said Sundar Pichai, CEO of Alphabet and Google, in an earnings release. 

Overall, the number of paid subscriptions for Google's suite of applications has now reached 350 million, with YouTube and Google One as the key drivers. Gemini Enterprise has great momentum, with 40% quarter-on-quarter growth in paid monthly active users. 

The strong results come against the background of Alphabet, along with most other Mag 7 firms’ efforts related to adopting a full-stack approach, where they own the data centers that support the development of their AI plans and ambitions. 

Investors are looking at cloud business revenue and guidance as a barometer of demand across the broader AI boom. For Google, that doesn’t seem to be much of a problem with its cloud business backlog nearly doubling quarter on quarter to over $460 billion at the end of Q1. 

Google’s cloud computing unit reported sales of $20 billion, compared with the $18.4 billion that analysts had expected. The unit saw a “meaningful acceleration in growth,” driven by demand for its AI software and infrastructure, Google said in a statement. 

Investors are constantly judging the massive capital expenditures tech stocks are claiming to make to make AI advancements, and whether such expenses will bring the desired revenue and profits. 

While Google did not comment on its full-year CapEx outlook in its Q1 earnings release, it had mentioned earlier in February that capital expenditures will reach as much as $185 billion in 2026, double what it spent last year. 

The company also announced a 5% increase to the dividend, resulting in a quarterly cash dividend of $0.22.

Retail View 

Retail sentiment on Stocktwits was ‘extremely bullish’ with ‘high’ message volumes.

One user exclaimed that Google was the winner in the Mag 7 AI stock race.

The stock has gained 12% year-to-date. 

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