Alphabet's AI Ambitions Ignite Revenue Surge Amid Skepticism

Alphabet's shares gained over 5% as investors were reassured by the company's AI investments, boosting its ad revenue despite a slowdown in cloud growth. Alphabet's robust performance comes in the face of U.S.-China trade tensions and ongoing antitrust actions, positioning it as a strong player in tech investments.

Alphabet's stock surged over 5% during premarket trading Friday following reassurances that its investments in artificial intelligence are invigorating its advertising revenue and partially offsetting a drop in cloud revenue.

Analysts were impressed with the 8.5% increase in Alphabet's advertising revenue, which accounts for nearly three-quarters of the company's total income. Despite a slower rise compared to the previous quarter's 10.6%, the performance exceeded expectations, showcasing Alphabet's AI-driven success, according to Stonehage Fleming's Gerrit Smit.

Amidst the backdrop of rising U.S.-China trade tensions and fears of an economic slowdown, concerns persist that tech giants like Alphabet may need to adjust their AI infrastructure spending. Nevertheless, Alphabet's resilient earnings prove its robustness and potential to stay a competitive force in technology, despite looming legal challenges from the U.S. Department of Justice federal antitrust actions.

(With inputs from agencies.)