Google’s parent company, Alphabet, is making waves in the world of AI stocks. After a downturn in the market, Alphabet’s stock has surged to all-time-highs in 2024, attracting investor attention for its solid earnings and market dominance.
Alphabet’s first-quarter results for 2024 showed a substantial revenue increase of 15% year-over-year, reaching $80.5 billion. What stood out even more was the operating income profit margin, which jumped from 25% to 32%, resulting in a significant 47% increase in operating profit to $25.5 billion.
As Alphabet continues to generate excess cash, the company announced its first-ever quarterly dividend, in addition to its ongoing share buyback program. With a strong cash position of $108 billion in cash and short-term investments, Alphabet is well-equipped to invest in its computing infrastructure and capitalize on the growing AI market.
Alphabet’s strategic investments in data center upgrades, including AI systems from Nvidia and Tensor Processing Units, position the company as a leader in AI computing infrastructure. Google Cloud, with its expanding list of enterprise capabilities, contributed $9.57 billion in quarterly revenue, up 28% year-over-year.
Despite the substantial capital expenditures involved in upgrading its data centers, Alphabet’s robust cash flow and profitability enable the company to maintain its competitive edge in the AI space. With a forward price-to-earnings ratio of 22, Alphabet may not be a cheap stock, but its long-term potential in the AI market makes it an attractive investment for investors looking for sustainable growth.
While Alphabet may not have made it onto The Motley Fool’s list of the top 10 stocks to buy now, the company’s track record of innovation and financial success makes it a compelling choice for investors seeking exposure to the AI sector. With Alphabet’s continued focus on AI development and infrastructure upgrades, the company is well-positioned for success in 2024 and beyond.
