Alphabet stock pares EPS gains after capex commentary; Analysts highlight Search strength

Investing.com -- Alphabet (NASDAQ: GOOGL) shares rose after the Google parent beat expectations on the top and bottom lines and said it would buy back $70 billion in shares.

Earnings per share of $1.17 and revenue of $69.79B beat expectations for $1.08 in earnings per share and $68.87B in revenue. Revenue rose 3% from the same time last year, growth that slowed from the 23% revenue growth in the first quarter of 2022.

CEO Sundar Pichai said the management was pleased with the performance. “We introduced important product updates anchored in deep computer science and AI. Our North Star is providing the most helpful answers for our users, and we see huge opportunities ahead, continuing our long track record of innovation,” he said.

The stock rose 1% in pre-market trading and is up 18% so far this year. It was initially up 5% in after-hours Tuesday before the CFO started discussing aggressive capex outlook and hiring plans for 2023 on the earnings call.

Revenue from Google advertising was $54.55B, which beat expectations. Revenue from YouTube ads was $6.69B and revenue from Google Cloud was $7.45B.

The first quarter included $2.6B in charges related to workforce and office space reductions.

Analysts highlighted strength in Alphabet's search business and positive momentum in cloud. Oppenheimer analyst Jason Helfstein hiked the price target by $10 to $145, citing stabilizing ad trends.

"YT showing signs of stabilization vs. 4Q, with improving Shorts monetization while engagement continues to grow," the analyst commented.

Roth MKM analyst Rohit Kulkarni also has a new price target on GOOGL stock - $134 per share.

"We see several potential catalysts over the near-term, Google I/O (May 10), Marketing Live (May 23), and the advertising industry's Upfronts and Newfronts events scattered across May. We'd be buyers of GOOGL shares ahead of these catalysts, particularly on weakness below $100, implying ~15.0x '24 P/E," he said.

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