Alphabet (GOOG, GOOGL) reported strong Q1 FY25 earnings, with revenue increasing 12% year-over-year to $90.2 billion, surpassing expectations by $1.0 billion. The operating margin improved to 34%, up 2 percentage points from the previous year, while earnings per share (EPS) reached $2.81, beating estimates by $0.80.
In detail, Google Cloud revenue rose 28% year-over-year to $12.3 billion, with an operating margin of 18%, an increase of 8 percentage points. YouTube ad revenue also grew by 10% to $8.9 billion.
Following the earnings report, Alphabet's stock increased by over 3%. The company announced a 5% dividend increase and a $70 billion stock buyback program. Analysts had projected an EPS of $2.01 on revenue of $89.1 billion, while last year’s Q1 figures were $1.89 EPS on $80.5 billion revenue.
Google's advertising revenue reached $66.8 billion, exceeding expectations of $66.4 billion. The Google Cloud Platform generated $12.2 billion, slightly below the anticipated $12.3 billion.
Despite these positive results, analysts express concerns about potential impacts from economic conditions and recent antitrust rulings. A federal judge's decision found Google to hold an illegal monopoly in the online advertising market, which may necessitate restructuring its ads business. Analysts predict a possible decline in digital ad performance in the second quarter due to macroeconomic uncertainties.
