Google wows Wall Road with robust Q1, however deflects questions on its enterprise since Trump’s tariffs

If the financial system is heading right into a downturn, Google hasn’t felt it.

Or at the very least, it did not really feel it up till March 31.

The web search large reported robust Q1 outcomes on Thursday that despatched its top off as a lot as 5% after hours, as its key promoting and cloud companies delivered wholesome development. However these outcomes apply to the primary calendar quarter of the yr, simply earlier than the Trump-triggered international commerce struggle started in earnest.

As for the enterprise situations Google is presently experiencing: Google is not saying. Executives at Google-parent firm Alphabet maintained a disciplined silence on Thursday’s earnings name about something that is occurred within the present quarter, regardless of analysts’ efforts to get an replace.

“It’s really too early to comment,” chief enterprise officer Philipp Schindler stated in response to at least one such question.

“We’re obviously not immune to the macro environment, but we wouldn’t want to speculate about potential impacts,” Schindler stated. (The one tidbit of knowledge Schindler was prepared to share concerned the scrapping of the so-called de-minimis delivery exemption relied on by Chinese language retailers like Shein and Temu, which might trigger a “slight headwind” to Google’s promoting enterprise in 2025, notably from Asian retailers).

After weeks of turmoil within the markets, and a wide range of issues weighing on Google particularly, the corporate’s robust Q1 report card—together with the information that it might bump up its dividend by a penny a share and repurchase one other $70 billion of inventory—was greater than sufficient cause for buyers to have a good time on Thursday.

Google grew its topline 12% year-over-year in Q1 to $90.2 billion, beating the common analyst expectation of $89.2 billion, whereas earnings per share got here in at $2.81 versus the $2.01 anticipated by Wall Road. The corporate ascribed the expansion to robust demand from advertisers within the monetary business, insurance coverage, healthcare, and retail.

Income from adverts on video web site YouTube grew 10% from the prior yr to $8.9 billion, whereas Google’s cloud enterprise elevated 28% to $12.3 billion.

Alphabet CEO Sundar Pichai touted beneficial properties in the corporate’s AI efforts, together with the “AI Overviews” being rolled out throughout Google’s search service, which Pichai stated is now utilized by 1.5 billion customers per thirty days. And the corporate re-affirmed its beforehand introduced plan to spend $75 billion in capital expenditures for its cloud and AI infrastructure this yr, signaling that it stays bullish on the AI enterprise.

Many risks going through Google

It is a difficult time for Alphabet. Going into Thursday’s earnings report, the corporate’s shares had slid roughly 15% to this point this yr, bigger than the drop suffered by the Nasdaq or the S&P 500.

Alphabet’s enterprise faces grave risks on a number of fronts, because the financial uncertainty of Trump’s tariffs pressures its core promoting enterprise, the proliferation of highly effective new AI fashions threaten to disrupt its web search dominance, and authorities regulators search to break up the corporate. 

The courtroom instances and regulatory threats confronted by Alphabet went unmentioned throughout Thursday’s earnings name, as executives highlighted progress within the firm’s varied merchandise, from its fast-growing YouTube subscriptions enterprise to its self-driving Waymo automobiles.

The truth that Alphabet traditionally hasn’t provided detailed “guidance” forecasts on its earnings calls offers it some cowl to keep away from the elephant within the room—the present state of demand from advertisers (versus the state of demand in Q1).

As a result of promoting accounts for roughly three-quarters of Alphabet’s income, the well being of the worldwide advert market within the months to return can be important. Promoting and advertising budgets are usually among the many first bills firms reduce in an financial downturn, and with uncertainty over tariffs, many economists and buyers are involved a couple of potential recession.

If Google’s enterprise have been really falling off a cliff in April, the corporate might have felt obligated to at the very least give some sort of warning. To some, the truth that Google stayed mum could possibly be interpreted as a tacit signal of confidence. And whereas Schindler sidestepped questions on enterprise situations in April, he alluded to Google’s expertise in earlier financial recessions and the comparative resilience of search promoting in comparison with different forms of promoting.

“To zoom out,” Schindler stated, “I would say we have a lot or experience in managing through uncertain times.”

This story was initially featured on Fortune.com