Alphabet (NASDAQ: $GOOG) Jumps 9%+ on Friday Following Q124 Earnings Beat and First Dividend Issuance

Alphabet (NASDAQ: $GOOG) is the third-largest tech firm by revenue and one of the most valuable. It offers numerous services to consumers, including internet search, drone delivery, streaming, health care scientific research, cloud services, and AI. The company makes most of its revenue from ad services via its Google Network services, including AdSense, AdMob, and AdManager.

On Thursday, April 25, Alphabet released its Q1 fiscal 2024 results to a positive market reaction.

Alphabet’s Q1 Results

In the first quarter, Alphabet reported a 25% revenue jump to $80.54 billion compared to $69.79 billion last year, beating forecasts of $78.59 billion. Net income for the quarter jumped 57.21% to $23.66 billion compared to $15.05 billion last year for a diluted EPS of $1.89, above estimates of $1.51.

The operating income increased 46.26% to 25.47 billion, while the operating margin improved from 25% in the first quarter of fiscal 2023 to 32%. The operating margin improved 400 basis points to 33% on a non-GAAP basis.

Regarding segment performance, YouTube ad revenue came in at $8.09 billion compared to $7.22 billion projected, while Google Cloud revenue came in at $9.57 billion, beating forecasts of $9.35 billion. The company’s Traffic Acquisition Costs came in at $1`2.95 billion, above estimates of $12.74 billion. Google ads, its best-performing segment, saw revenues rise 13.04% to $61.66 billion.

At the end of Q124, Alphabet reported net cash from operations of $28.85B and a free cash flow of $16.84 billion.

First-Ever Quarterly Dividend

For the first time since it went public, the Alphabet board has approved a dividend pay-out as part of its capital return program. The board has approved a payout of $0.20 per share on each of the three classes of shares. Additionally, the board approved another $70 billion in share buybacks for Class A and C shares.

Alphabet Stock Performance

Following the impressive Q1 results and dividend announcement, GOOG shares soared 9.72% on Friday, April 26, 2024, to $173.31 as of 11:08 AM EDT. Alphabet has had an impressive rally since the start of the year, rising 24.47%, compared to the 7.62% increase of the SPX year to date.

In the past 12 months, the stock is up an impressive 45.95%% compared to the 21.08%% gain of the SPX in the same period. The shares have a current market cap of $2.149T and an intraday market cap of $ 1.95 T. They are trading above the 50 DMA of $148.42 and the 200 DMA of $139.06, with a 3-month average volume of 23.2M.

Analysts Forecast

According to 37 stock analysts, Alphabet has an overall strong buy rating. They forecast a wide range for the stock, with a high of $185 and a low of $141. The average target of $167.51 is a 2.48% downside based on the most recent price.

Should You Invest in Alphabet?

Alphabet has lagged slightly behind rival Microsoft when it comes to AI investments. However, the company has the talent, depth, and financial resources to catch up. While it has made a few mistakes in the past few months, it is learning fast and progressing well.

During the earnings call on Thursday, executives emphasized that they were making the investments necessary to help them remain competitive. While investors are still wary of the enormous costs required to bring AI online and turn it profitable, they are confident in Alphabet’s ability to meet these challenges.

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