Google-parent Alphabet's revenue beats estimates as ad sales hold up

The latest earnings from Google and Microsoft, which together directly employ 9,000 people in the Republic, are being closely watched for any signs of further layoffs.

Google owner Alphabet has been looking to keep a tight control on costs amid US recession fears. File Picture: AP

Alphabet said yesterday it would buy back $70bn (€63.8bn) in stock and posted first-quarter revenue above estimates as demand rose for cloud services and ad sales held up better than expected.

Investors cheered the buyback plan, sending shares of the Google parent about 4% higher in extended trading.

Advertisers, who contribute the bulk of Alphabet's sales, have been shifting budgets to proven platforms such as Google's products and its YouTube unit from untested advertising models.

Alphabet reported a slight dip in ad sales to $54.55bn from $54.66bn a year earlier. The decline is just the third in the company’s history since it became public in 2004, but follows a fourth-quarter drop of 3.6%.

The company, meanwhile, has been looking to keep a tight control on costs amid recession fears and had in January decided to cut about 12,000 jobs.

It has also been sharpening focus on artificial intelligence in its race to gain lost ground from Microsoft's Bing, which includes a chatbot feature based on OpenAI's Chat GPT.

Alphabet's revenue for the quarter ended March 31 stood at $69.79bn.

It reported net profit of $15.05bn for the first three months of the year compared with $16.44bn a year earlier.

Meanwhile, Microsoft beat Wall St's estimates for third-quarter revenue, driven by growth in its cloud computing and Office productivity software businesses.

Shares gained 4% in after-market trading following a report by Microsoft that profits were $2.45 per share, beating Wall St estimates of $2.23, according to data from Refinitiv and up 10% from the same quarter last year.

Revenue rose 7% to $52.9bn in the quarter ended March, inching past the average analyst estimate of $51.02bn, according to Refinitiv. The bulk of Microsoft sales still come from selling software and cloud computing services to customers.

Microsoft said growth at its cloud business Azure was 27% in the latest reported quarter, beating analysts expectations for 26.6% growth.

Analysts had expected a gloomy economic outlook to hit Microsoft's Windows business, which depends heavily on PC sales that have sagged in recent quarters. The sales drop in the segment was less severe than analyst expected, with Microsoft reporting revenue of $13.3bn versus analyst estimates of $12.19bn, according to Refinitiv data.

The company's productivity segment, which includes its Office software and advertising sales for the LinkedIn social networking site, had revenue of $17.5bn.

Overall revenue for the company's cloud unit, which includes Azure as well as other services, was $22.1bn.

The latest earnings from Google and Microsoft, which together directly employ 9,000 people in the Republic, are being closely watched for any signs that the shake-out of global jobs by the large US tech multinationals that started late last year will soon pass or deepen. Some Big Tech firms have since doubled down by announcing further layoffs. 

By the end of February, major tech firms had announced 87,330 global layoffs, of which an estimated 2,310 layoffs may affect their Irish operations, according to a tally run by the Central Bank of Ireland. 

The tech sector has been hit by the rapid rise in global interest rates and fears of a recession in the US. Amazon and Facebook-owner Meta report earnings later this week, and Apple next week. 

Reuters. Additional reporting Irish Examiner