Alphabet Stock Surges 11% on Blowout Earnings, First Dividend
Alphabet stock surged ahead of Friday's opening bell as investors cheered the Google owner's blowout first-quarter earnings. Shares were up 11% to almost $174 shortly before 5 a.m. ET. If those gains hold until the opening bell, its valuation will top $2 trillion for the first time. The stock climbed higher after Alphabet posted earnings for the three months to March 31 after Thursday's close with profits and revenue that both smashed analysts' forecasts.
Alphabet's First Dividend Announcement
The announcement that it would follow the lead of rivals including Microsoft, Apple, and Meta by issuing its first dividend also served as a green light for the market. "Alphabet joining the ranks of tech companies paying dividends is a sign of the times," AJ Bell investment director Russ Mould said.
Microsoft's Performance in Comparison
Meanwhile, Microsoft stock made more modest gains after it reported first-quarter earnings on Thursday afternoon. Shares were up almost in pre-market trading, putting its market capitalization on course to jump about $11 billion at the opening bell back above $3 trillion. It first hit that milestone back in January following a 207% surge over the past five years. Microsoft said it plans to ramp up spending on artificial intelligence and cloud services to take advantage of the AI boom.
The Impact of AI on Microsoft
CFO Amy Hood said on a post-earnings call with analysts that spending would increase "materially," adding that the company's AI capacity hadn't kept pace with soaring demand. Microsoft has emerged as one of the major winners from the AI boom due to its close relationship with OpenAI, the developer of ChatGPT. "The path to AI monetization is clearest for Microsoft," Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said.
Market Outlook and Future Trends
The two "Magnificent Seven" stocks' big gains looked set to power broader indexes higher. S&P 500 futures climbed 0.7% in early-morning trading, while futures for the tech-heavy Nasdaq 100 jumped 0.9%. Investors will also be eyeing the Bureau of Economic Analysis' personal consumption expenditures inflation gauge, with the March reading due to be released later.
