Alphabet Beats Revenue Estimates on Surge in Ad Sales

Google parent company Alphabet Inc. reported a better-than-expected quarterly profit and revenue that was lifted by a surge in advertising demand as businesses increased their marketing budgets.

The company's revenue came in at $75.33 billion in the three months ended March 31, compared with analysts' average estimate of $74.31 billion, according to Refinitiv data. Alphabet's net income was $16.44 billion, or $24.62 per share, compared with the average estimate of $23.37 per share.

Google's advertising business, which accounts for the majority of its revenue, grew 22% to $54.66 billion in the quarter. The company's YouTube video platform saw a 49% increase in ad revenue to $6.87 billion.

Alphabet's cloud computing business, Google Cloud, reported revenue of $5.82 billion, up 44% from a year earlier. The company has been investing heavily in cloud computing in recent years to compete with rivals such as Amazon.com Inc. and Microsoft Corp.

Despite the strong results, Alphabet shares fell about 4% in after-hours trading. Some investors may have been disappointed by the company's operating expenses, which rose 23% to $22.28 billion in the quarter.

Overall, Alphabet's results suggest that the digital advertising market is recovering from the pandemic. This is good news for other companies that rely on online advertising, such as Facebook Inc. and Twitter Inc.