Meta Platforms (META, Financial) experienced a downturn in its stock value after announcing a significant increase in its FY24 capex guidance, highlighting the costly nature of its AI technology investments. In contrast, Google (GOOG, Financial) is also heavily investing in AI, including the development of Gemini 1.5, but with evidently more immediate benefits. This was reflected in GOOG's outstanding Q1 results, surpassing analysts' expectations and demonstrating the potential of AI to enhance, rather than threaten, its core search business. Mark Zuckerberg of META has admitted that the payoff from their investments might take years.
Key highlights from Google's Q1 performance include:
- Google Search and Other revenue rose by 14.4% year-over-year to $46.2 billion, outpacing estimates. The APAC region's retail sector played a significant role in this growth.
- YouTube's ad revenue increased by 21% year-over-year to $8.09 billion, thanks to strong performance in both direct response and brand advertising. The platform's Shorts feature is also seeing increased monetization rates.
- The overall advertising business at Google grew by 13.0% to $61.6 billion, indicating robust advertising spend. AI's integration across Google's ads ecosystem is proving to be an asset.
- Google Cloud's revenue jumped by 28.5% to $9.57 billion, significantly outperforming expectations and marking a notable improvement from the previous quarter. This growth is particularly impressive compared to its rivals, Microsoft (MSFT, Financial) Azure and Amazon (AMZN, Financial) Web Services.
Additionally, Google announced its first-ever dividend program, setting a cash dividend of $0.20 per share and authorizing a stock repurchase of up to $70.0 billion. These shareholder-friendly moves, combined with the robust Q1 results, underscore confidence in Google's ability to not just withstand the challenges of the AI era but to flourish.
