(Reuters) -Google parent Alphabet said it would buy back $70 billion worth of shares as it reported first-quarter profit above Wall Street expectations on Thursday.
Shares jumped 4% in extended trading, adding about $75 billion to the company’s market value.
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Alphabet beat quarterly revenue estimates, benefiting from steady growth in its digital advertising business, which helped offset muted growth at its cloud computing unit.
U.S. President Donald Trump’s trade policy has triggered worries of an economic downturn, prompting companies to rethink their spending on advertising. But analysts say the digital ad market still held its ground in the first quarter.
“Search saw continued strong growth, boosted by the engagement we’re seeing with features like AI Overviews, which now has 1.5 billion users per month,” CEO Sundar Pichai said in a statement.
Revenue from Google’s mainstay ad business, which makes up about 75% of its overall revenue, rose 8.5% to $66.89 billion in the quarter — a slowdown from the prior quarter’s 10.6% increase, but still above analysts’ expectations for a rise of 7.7%.
Google Cloud reported a 28% rise in revenue to $12.26 billion, slowing from the 30.1% growth reported in the previous quarter. Analysts were expecting the unit to report revenue of $12.27 billion, according to LSEG’s data compilation.
The company reported total revenue of $90.23 billion for the first quarter, compared to analysts’ average estimate of $89.12 billion.
Alphabet reported a profit of $2.81 per share for the January-March period, beating estimates of $2.01 per share, according to LSEG data.
Alphabet spent $17.20 billion on capital expenditures in the quarter, a 43% increase from the same period a year earlier.
It was part of a planned $75 billion of spending this year, which Pichai reaffirmed earlier this month, to build out data center capacity, even as U.S. tariffs threaten to cast a shadow on the capital costs of AI projects.
Pichai said at the time the massive investment was needed to buy the chips and build the servers required to burnish Alphabet’s core offerings, including Search, while supporting the development of AI services such as its Gemini model.
Big Tech has continued to defend its aggressive AI spend despite macroeconomic pressures and competitive threat from China’s DeepSeek. Amazon’s <AMZN.O> CEO earlier this month wrote in a letter that billion-dollar outlays were necessary to remain competitive in the AI space.
But early signs of tech majors slowing down on data center leases are already starting to show, with TD Cowen analysts saying last month that Microsoft had abandoned some projects in the U.S. and Europe, while Wells Fargo analysts said this week that Amazon had delayed some commitments around new leases.
With Alphabet’s results showing demand for digital ads remains robust, shares of rival ad sellers also rose, with Meta Platforms up 2%, and Amazon and Snap both 1% higher in extended trade.
(Reporting by Deborah Sophia in Bengaluru and Kenrick Cai in San Francisco; Editing by Nia Williams and Alan Barona)
