Larry Page's five-year tenure as CEO of Google -- and now its new corporate parent Alphabet -- is reminding investors that patience pays off, despite a letdown in the first quarter. After lagging its peers in the early stages of Page's reign, the Internet's most powerful company has since delivered returns that trounced both the Standard & Poor's 500 and Apple shares. Since Page took the helm in 2011, Alphabet's stock has soared 163 percent, creating an additional 300 billion in shareholder wealth. The S&P 500 rose 58 percent during the same period; Apple's stock is up 115 percent. Some of Alphabet's gains evaporated late Thursday after the company announced first-quarter earnings and revenue that fell below analyst projections.
SAN FRANCISCO – Alphabet Inc. reported a 21 percent jump in quarterly revenue Monday, maintaining a growth rate that is rarely seen among companies its size and suggesting the big sales gains enjoyed recently by the other internet firms are not done yet. Alphabet, the owner of Google and YouTube, said it made $3.5 billion in net income on sales of $26 billion. The profit would have been much larger but for a record $2.7 billion European Union antitrust fine. Still, the company noted that costs were rising faster than sales and warned that expenses would remain high as more searches shift to mobile devices. The squeeze on expected future profit appeared to weigh on Alphabet's share price, which fell about 3 percent to $967 after the bell.
Artificial intelligence is nothing new at Google, but today we learned just how big a role top boss Sundar Pichai sees AI playing in our future. Answering an analyst query on Google-parent company Alphabet's Q1 2016 earnings call about how the company is leading innovation, rather than simply adapting to changes in technology, Pichai talked about his role in projecting where Alphabet is going in the next 10 years. He gave a shout out to VR as the hot new platform, and then wrapped up his comments by saying: "In the long run, I think we will evolve in computing from a mobile-first world to an AI-first world." Earlier in the call he cited Google's DeepMind AlphaGo super computer defeating a human champion as an extraordinary achievement. He also said the company is investing in AI and machine learning, areas that are taking off and beginning to bear real-world benefits.
Google CEO Sundar Pichai speaks during a forum at The Indian Institute of Technology earlier this month. Google parent company Alphabet reported a strong finish to 2016 on Thursday with reported revenue of $26.1 billion, up more than 22 percent year over year, or $7.56 per share. Excluding certain expenses, that comes to $9.36 per share. Analysts had predicted $9.67 in adjusted earnings per share. Company executives touted strong results in mobile search, among other things, and cited continued growth in YouTube.
A Google empire built on search shifted attention on Thursday to high-speed Internet networks, 360-degree video broadcasting and "other bets" as parent company Alphabet logged disappointing earnings. Alphabet said net income hit 4.2 billion in the first three months of this year, but shares sank more than five percent to 714 in after-market trades that followed release of the report. The earnings per share fell 46 cents short of analysts' expectations. Revenue in the quarter rose to nearly 20.3 billion compared to 17.26 billion in the same period a year earlier. The results "represent a tremendous start to the year," said Alphabet chief financial officer Ruth Porat.