Alphabet, the company that controls Google, has officially entered the restriction club of multi-trillion companies: it is firmly beyond the 2 trillion dollar capitalization threshold, which it had briefly exceeded at the end of 2021 as well.
Judging by the latest quarterly accounts, the Mountain View giant seems destined to remain there, chasing Microsoft (which stands at 3 trillion dollars), Apple (2.6 trillion) e Nvidia (2.2 trillion); for reference, Amazon and Meta are stuck at $1.8 and $1.1 trillion, respectively.
How Google makes real money
For Alphabet this is a important milestone, and even more so now, after 18 complex months, in which the company had been accused of having missed the artificial intelligence train and seemed to be chasing OpenAI. It was not like this, as we have often written on Italian Techbut now the figures have arrived to further confirm it.
In this time, Google has indeed accelerated the use of AI in many of its products, but also he hasn’t forgotten what is the heart of his business and the main source of its strength and wealth: online search and advertising. And that’s in fact where the real money comes from in the latest quarterly report.
The data speaks of over $80 billion in revenue and as much as $25.5 billion in operating profit in Q1 2024, which is not only the 15% more revenue year over year, but also 14% more profit than Q4 2023, i.e. the holiday quarter, when search and advertiser revenue is usually at its highest. This caused the company to distribute to shareholders the first dividend in its history (he had never done this before) and also started a plan to buy back its shares for 70 billion of dollars. And above all it has put the spotlight back on what Google’s real work is.
In the first quarter of 2024, the revenue from search and advertising have increased (each) by 14% year over year, YouTube Ads increased nearly 21%, and Subscriptions, Platforms & Devices grew another 18%, primarily driven by YouTube Premium. Only from advertising, and only in the first 3 months of the year, the best known of the search engines has grossed over 46 billion dollars: That’s roughly $20 million in revenue every hour. It is true that Google uses and offers advertisers some tools based on artificial intelligence to better reach potential customers but it is doing so with caution, without destroying this enormous source of money: “We want to be prudent, focusing on the areas in which AI generative can improve the search experience, giving priority to traffic to sites and to those who sell their products”, as Sundar Pichai saidCEO of the company.