Google's Q1 2024 earnings report interpretation: A desperate battle turned into a great victory.

In the first quarter of fiscal year 2024, Alphabet's revenue reached $80.539 billion, a 15% increase from $69.787 billion in the same period last year, marking the fastest growth since early 2022. Net profit surged to $23.662 billion, a 57% jump from $15.051 billion year-over-year, surpassing the expected $18.95 billion. Adjusted earnings per share were $1.89, far exceeding the expected $1.53 and soaring 61.5% from $1.17 in the same period last year.

Breaking it down by business, the cloud division—the market's most-watched segment and considered Google's next growth engine—saw revenue rise 28.4% year-over-year to $9.57 billion, beating analysts' expectations of $9.37 billion. Operating profit leaped to $900 million, more than quadrupling from $190 million in the same period last year.

Beyond the numbers, this earnings report demonstrates Google's robust money-printing capabilities. More importantly, its cloud and AI businesses, previously seen as lagging, have now fully caught up!

Over the past three years, these two sectors have been the battleground for tech giants, with Microsoft leading the pack while Google's core business faced instability.

I once described this battle as: Microsoft's fight for growth, Apple's fight for optimization, and Google's fight for survival.

For a long time, Microsoft, thanks to OpenAI, left competitors in the dust. Apple tinkered without producing anything substantial, while Google cycled through multiple versions of large models, only to stumble repeatedly due to issues like video fakery and excessive political correctness.

But as companies frantically bought NVIDIA's GPUs and continuously upgraded their AI capabilities, the current ceiling became apparent. Microsoft hasn't announced new breakthroughs in a while, META's models are impressive, and even China's KIMI is making strides. With frontrunners slowing down, Google, fighting with its back against the wall, has caught up and no longer faces the risk of being sidelined.

This highlights Google's strength but also suggests that the moat in the AI large-model race isn't as deep as imagined. It seems that with enough NVIDIA GPUs, time, and energy, anyone can train a competitive product?

Beyond holding its ground, Google has also delivered for investors with two major positive developments:

1. Google is starting to pay dividends—a rare move!

Alphabet's board approved a cash dividend program on Thursday, announcing a $0.20 per share cash dividend for Class A, B, and C shareholders of record as of June 10, 2024, payable on June 17, 2024.

The company plans to pay quarterly cash dividends going forward, subject to board evaluation and approval.

2. Google is buying back shares again!

The company and its board authorized an additional $70 billion repurchase of Class A and C shares "in a manner deemed in the best interests of the company and its shareholders."

Alphabet ended the quarter with $108 billion in cash, equivalents, and marketable securities, slightly down from $110.9 billion year-over-year.

With business growing, revenue rising, the core stabilizing, and shareholder returns expanding, this combo has turned Google—long under market skepticism—into the brightest star of this earnings season so far.$Alphabet(GOOGL.US)