Will Alphabet Stock Keep Rising After Crushing Q1 Earnings Expectations?

Core Insights - Alphabet (GOOGL) shares surged by up to 4% following the release of its Q1 earnings, which significantly exceeded expectations [1][6] - Despite a strong performance, GOOGL shares are down 14% year-to-date, although they have gained 37% over the last three years, outperforming the S&P 500 [2] Q1 Financial Performance - Alphabet reported Q1 sales of $76.48 billion, a 13% increase from $67.59 billion in the same quarter last year, surpassing estimates of $75.52 billion by 1% [3][4] - The company's Q1 EPS reached $2.81, exceeding expectations of $2.02 by 39% and increasing 48% from $1.89 per share a year ago [4][6] - Key segments such as Google Search, YouTube advertising, and Google Cloud all experienced double-digit revenue growth during Q1 [4][6] Future Outlook - Alphabet did not provide specific full-year guidance but indicated that advertising revenue from Google services may be affected by previous strengths in the financial services sector throughout 2024 [7] - The company noted that its cloud services are in a tight supply-demand environment, with potential variability in revenue growth rates based on capacity deployment, although higher capacity deployment is expected towards the end of the year [8] Sales and Earnings Projections - According to Zacks estimates, Alphabet's total sales are projected to rise by 9% in fiscal 2025 and by another 10% in FY26, reaching $355.95 billion [9] - Annual earnings are expected to increase by 8% this year and are projected to rise by 14% in FY26 to $9.90 per share [9] Shareholder Returns - In Q1, Alphabet returned $15.1 billion to shareholders through share repurchases and $2.4 billion in dividend payments [12] - The company announced a 5% increase in its quarterly dividend, raising it from $0.80 to $0.84 per share, marking its first dividend increase since initiating payouts in June 2024 [13][14]