Alphabet Reports Impressive Results, But AI Competition and Lawsuits Cast a Shadow Over Its Future

Alphabet's revenue and profit for the first quarter exceeded expectations. However, the market is worried about its future due to AI competition and legal issues.

On Thursday, Alphabet Inc (GOOG) announced its first-quarter results after hours. The performance was stunning. They also announced a $70 billion stock buyback, boosting shares by 6% at one point. They later settled at a 4.63% increase.

Alphabet stock price chart, source: Google.

According to the earnings report, Alphabet's Q1 revenue was $90.23 billion, surpassing analysts' expectations of $89.1 billion. Earnings per share were $2.81, well above the forecast of $2.01.

The strong performance came from its core business—advertising revenue. Google’s ad revenue was $66.89 billion, exceeding expectations of $66.39 billion. However, revenue from Google Cloud and YouTube ads fell short or met analyst expectations.

Despite the strong Q1 results, the market is concerned about the future. Alphabet faces fierce competition in AI and ongoing lawsuits. Currently, its generative AI, Gemini, trails behind OpenAI's ChatGPT and Meta AI. It also faces strong competition from DeepSeek.

Moreover, a U.S. federal judge ruled that Google violated antitrust laws. This could lead to hefty fines and the divestment of products like the Chrome browser. The judge stated, "Google intended to engage in a series of anti-competitive practices to obtain and maintain its monopoly in the open web display advertising market."