Alphabet Reports Impressive Results, But AI Competition and Lawsuits Cast a Shadow Over Its Future

TradingKey - Alphabet's revenue and profit for the first quarter exceeded expectations. However, the market is worried about its future due to AI competition and legal issues.

On Thursday, Alphabet Inc (GOOG) announced its first-quarter results after market close, delivering a stunning performance. The company also unveiled a $70 billion stock buyback, which initially sent shares up by as much as 6% before settling with   a 4.63% gain.

Alphabet stock price chart, source: Google.

According to the earnings report, Alphabet's Q1 revenue reached $90.23 billion, surpassing analysts' expectations of $89.1 billion. Earnings per share were $2.81, significantly beating the forecast of $2.01.

The strong performance was driven by Alphabet’s  core business—advertising . Google’s ad revenue totalled $66.89 billion, exceeding expectations of $66.39 billion. However, revenue from Google Cloud and YouTube ads either met or fell slightly short of analyst forecasts.

Despite the robust Q1 results,  market concerns about Alphabet’s future persist. The company faces intense competition in AI, as well as mounting legal challenges. Currently, its generative AI platform, Gemini, lags behind OpenAI's ChatGPT,  Meta AI, and emerging rivals such as DeepSeek.

Moreover, a U.S. federal judge recently ruled that Google violated antitrust laws—raising the possibility of substantial fines and even  the forced divestiture of key products such as  the Chrome browser. The judge stated that "Google intended to engage in a series of anti-competitive practices to obtain and maintain its monopoly in the open web display advertising market."