Alphabet reports Q1 earnings after market close today. Revenue was $69.7B versus $68.96B expected. EPS was $1.17 versus $1.08 expected. Ad revenue was $54.55B vs. $53.75B expected. They also announced a $70B share buyback program and Google Cloud finally turned a profit in Q1 2023 (probably due to all the AI compute spurred by generative models).
Overall, the results are better than expected. But the expectation has been low. Their ad revenue had another YoY decline from $54.66B to $54.55B and their YoY revenue growth rate slowed down dramatically, going from 23% to 3%. Alphabet’s PE is currently at ~23. It’s not too bad given they have a very strong moat in search and AI. But there are a lot of headwinds ahead of them: slowing advertising business growth, declining employee morale due to layoffs and bureaucracy, disruptions on their core search business from ChatGPT/Bing, just to name a few. It’s going to be quite a roller coaster ride for Alphabet investors and employees down the road.