Alphabet Surges After Announcing First-Ever Dividend and $70 Billion Stock Buyback
In a move that surprised and delighted investors, Alphabet, the parent company of Google, announced its first-ever dividend and a massive $70 billion stock buyback on Thursday. The news sent the stock soaring nearly 16% after the bell, increasing the company’s market value by over $300 billion to more than $2 trillion.
The decision to return capital to shareholders comes as Alphabet continues to invest billions of dollars in data centers to compete with rivals in the field of generative artificial intelligence. The dividend, set at 20 cents per share, marks a significant milestone for the tech giant.
Just three months ago, Alphabet’s competitor Meta Platforms made a similar move by announcing its own first-ever dividend, which resulted in a $196 billion increase in the company’s market value the following day. Amazon.com remains the only Big Tech firm that has not yet offered a dividend to its investors.
Alphabet’s strong performance in the quarter, beating expectations in sales, profit, and advertising, has further boosted investor confidence in the company. The surge in after-hours trading reflects the market’s positive reaction to the news.
CEO Sundar Pichai highlighted Google’s AI offerings as a key driver of growth, emphasizing the increasing adoption of AI in search results. The company’s revenue for the quarter ended March 31 was $80.54 billion, surpassing estimates of $78.59 billion.
Despite facing competition from the likes of Amazon, Facebook, and TikTok, Alphabet’s cloud services revenue grew by 28% in the first quarter, fueled by the demand for generative AI tools. The company’s commitment to investing in AI technology is expected to drive future growth and innovation.
Overall, Alphabet’s strategic decision to offer a dividend and initiate a stock buyback has been well-received by investors, signaling a positive outlook for the tech giant in the coming months.