Alphabet Inc, Google's parent company, reported strong first-quarter 2025 earnings, surpassing analyst expectations. However, uncertainty surrounding the impact of tariffs proposed by the Trump administration on the second quarter raised concerns among investors and analysts.
Alphabet's Q1 2025 Earnings Highlights
- Earnings Per Share (EPS): $2.81, beating estimates of $2.01, a 49% year-over-year (YoY) increase.
- Total Revenue: $90.23 billion, exceeding estimates of $89.1 billion, up 12% YoY (14% in constant currency).
- Revenue Excluding Traffic Acquisition Costs (Ex-TAC): $76.49 billion, surpassing estimates of $75.4 billion, up 13% YoY.
- Google Services Revenue: $77.3 billion, up 10% YoY, with YouTube advertising revenue growing 14% to $8.93 billion (slightly below estimates of $8.94 billion).
- Google Cloud Revenue: $12.26 billion, up 28.1% YoY but below estimates of $12.32 billion, with growth slowing from 30.1% in Q4 2024.
- Operating Income: $30.6 billion, up 20% YoY, with an operating margin expansion of 2 percentage points to 34%.
- Net Income: $34.5 billion, up 46% YoY.
While Alphabet's Q1 performance was strong, the potential impact of tariffs proposed by the Trump administration, which took effect in early 2025, remains a significant concern for the second quarter.
The Trump administration implemented tariffs, including 25% on imports from Canada and Mexico (effective March 4, 2025, with some exemptions until April 2), 20% on Chinese imports (increased from 10% on March 4), and potential tariffs on semiconductors, pharmaceuticals, and the European Union. These tariffs are projected to raise the U.S. average effective tariff rate to 11.3%, the highest since 1943, and could increase consumer prices and reduce GDP.
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