Alphabet’s shares surged nearly 3% on Friday following the release of a solid earnings report that highlighted the positive impact of its artificial intelligence (AI) investments on its core advertising business. The Google parent company reported an 8.5% increase in advertising revenue for the first quarter, surpassing expectations and easing investor concerns about potential declines in the digital ad market amid global trade tensions.
Despite fears of a slowdown in U.S. ad spending, especially after early April reports showed a significant pullback from major advertisers like Temu and Shein, Alphabet’s growth was seen as a welcome respite for the digital ad sector. The strong performance helped offset concerns about competition and the effects of rising tariffs.
Alphabet’s earnings report also contributed to a broader rally in social media stocks, with Meta Platforms rising 1.5%, Pinterest up nearly 2%, and Snap gaining more than 3%. Analysts pointed out that Alphabet’s continued focus on AI is proving advantageous as the company remains in a competitive race with OpenAI, Perplexity, and others.
Additionally, Alphabet’s stock was buoyed by a $70 billion share buyback plan and the announcement that its AI Overviews feature now has 1.5 billion monthly users—just a year after launch.
BofA Global Research believes Google is well-positioned in the AI race due to its data and distribution advantages. Despite a 16% drop in Alphabet’s stock this year, analysts remain optimistic about the company’s long-term growth potential, with some highlighting Alphabet’s strong fundamentals as a key factor.
