Happy Friday, investors. Increasingly, company earnings have become a story of forward guidance more than performance — and what Alphabet reported last night holds ramifications for the biggest tech firms in the world. Was this email forwarded to you? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

AI trade redux?

Google just reminded the world that it still knows how to print cash. 

Alphabet stock rallied in overnight trading after the company reported a stronger-than-expected earnings beat on Thursday. Prior to earnings, shares had fallen 15.3% so far in 2025, mirroring the 16.6% fall for the Magnificent Seven as a group.

Here’s how the tech giant performed in the first quarter versus LSEG estimates: 

• Earnings per share: $2.81 actual, $2.01 expected

• Revenue: $90.2 billion actual, $89.1 billion expected

Compared to a year ago, revenue grew 12%, more than the 10% consensus forecast, while net income jumped 46% to $34.5 billion. 

“This quarter was super exciting,” said CEO Sundar Pichai, “as we rolled out Gemini 2.5, our most intelligent AI model, which is achieving breakthroughs in performance and is an extraordinary foundation for our future innovation.”

As large as the Google-parent’s windfall was to start the year, so are its spending plans. Capital expenditures surged 43% to $17.2 billion in the quarter compared to 2024, the highest in company history.

Management signaled even more investment to come as Alphabet races to build out data centers and AI infrastructure. 

Not only is that level of spending a bet on Alphabet’s own future, but it’s a green light for investors who have been wondering whether the AI trade had petered out or fallen victim to tariff uncertainty. 

“The read-through here is a positive for Nvidia, given that AI infrastructure is demanding massive spend from tech giants,” Bret Kenwell, an investment analyst with eToro, told Opening Bell Daily.

“If the rest of [the Magnificent 7] reports earnings like Alphabet did, then perhaps mega-cap tech can help lead to some much-needed stabilization in the broader market rather than acting like the anchor that it’s been.”

Aside from its AI spending plans, Alphabet’s numbers showed its core engine is still humming. Ad revenue hit $66.9 billion, up more than 8% year-over-year, and Cloud grew 28% to $12.2 billion. 

Alphabet also announced a 5% dividend hike to $0.21 and a $70 billion stock buyback program.

To be clear, Alphabet has dealt with recent antitrust lawsuits in the US and European regulators are still circling. The risk of forced divestitures or changes to its business model loom indeed large.

That said, Alphabet is not spending like a company that’s worried about the future. 

Google’s checkbook is open, the AI race remains a priority, and the rest of the Magnificent Seven may have just found their next leg higher. 

Market snapshot

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Elsewhere

✈️ Airlines are pulling their full-year guidance. Southwest, American, and Alaska Airlines all withdrew their 2025 guidance due to macroeconomic uncertainty. Each of the three names saw their stocks fall on Thursday. (Barron’s)

🏠️ Home sales in March dropped 5.9%. That’s the largest drop for existing home sales since November 2022, dashing hopes for a spring turnaround. High prices and mortgage rates have deterred buyers, and it could lead to a third year of weak market activity. (WSJ)

Rapid-fire

• Trump says he expects a deal with Norway on tariffs (Bloomberg)

• Treasury Secretary Scott Bessent said the US and South Korea could come to a trade agreement as early as next week (WSJ)

• Texas Instruments stock surged more than 6% after upbeat earnings guidance (Barron’s)

• PepsiCo warned that tariffs will hurt earnings, as its drinks depend on imports (WSJ)

• Meta has laid off employees working in its virtual reality division (CNBC)

• You don’t have to outsmart the room to stand out at work (Blog)

• Intel stock tumbled despite first-quarter earnings that beat on top and bottom lines (CNBC)

• Take the red pill of finance (and memes)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].