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Alphabet shares rose after it reported double-digit increases in first-quarter revenue and profit, driven by another good performance in its search business and the boom in artificial intelligence-related demand for cloud computing.

Revenue rose 12 per cent to $90.2bn, while net income jumped 46 per cent to $34.5bn, from the same period a year earlier, the parent company of Google reported on Thursday. Both beat expectations and helped calm fears about its ability to weather a trade war and US recession.

Google’s core search and advertising business grew almost 10 per cent to $50.7bn in the quarter, surpassing estimates for between 8 per cent and 9 per cent.

The figures gave comfort to investors who have been watching closely for any softness in search — which accounts for 56 per cent of group revenues — because of the popularity of AI chatbots such as OpenAI’s ChatGPT, Anthropic’s Claude and Elon Musk’s Grok.

They have also been on alert for evidence that answers from Google’s own Gemini chatbot and AI summaries are cannibalising that core business by reducing the number of user clicks on ads.

“Search saw continued strong growth, boosted by the engagement we’re seeing with features like AI Overviews,” said chief executive Sundar Pichai, referring to AI-generated answers it now shows at the top of many results pages. “We’re leaning in heavily here, continuing to roll the feature out in new countries, to more users and to more queries.”

Chief business officer Philipp Schindler said “we see monetisation at approximately the same rate” for AI Overviews versus traditional search links, while declining to specify exact user click-through rates.

Jefferies analyst Brent Thill said the results were “better than feared, with healthy ads and cloud”. He had previously cautioned that “macroeconomics and tariffs [would] cast a haze over the second and third quarter” and advertising “faces headwinds” as Chinese sellers reduce spending.

Alphabet shares rose more than 4 per cent in after-market trading. The company said it would buy back $70bn of shares, the same amount as last year.

A one-off $8bn gain related to shares in a private company it did not name boosted the increase in net income.

Google is the second Big Tech company to report earnings in the wake of US President Donald Trump’s global trade war. Alphabet shares have fallen about 17 per cent this year. Like most of its rivals, the company has been affected by concerns about tariffs disrupting supply chains and softening consumer spending, promoting fears of a US recession.

“We’re obviously not immune to the macro environment,” Schindler said.

This month the White House raised duties on small packages, which were previously exempt if valued at less than $800. That caused Chinese ecommerce groups Temu and Shein to slash their spending on digital ad platforms such as Google and Meta.

Schindler said the policy change “will cause a slight headwind to our ads business in 2025, primarily from Asian-based retailers”.

Earlier this week, Tesla warned tariffs would have an “outsized” impact on its battery business that relies on components from China. Chief executive Elon Musk pledged to continue to lobby Trump in favour of free-trade principles.

But Alphabet’s overall revenues beat Wall Street consensus expectations, of $89.2bn, according to Capital IQ.

Its cloud computing division reported a 28 per cent surge in revenue to $12.3bn, showing continued appetite for its data centre and network services from the boom in AI. However, this slowed from 30.1 per cent in the prior quarter, which Alphabet blamed on demand outstripping supply as it races to bring new data centres online.

Alphabet’s record spending on chips, networking equipment and other AI infrastructure continued to increase, shrugging off investor concerns about Big Tech’s $300bn spending plans this year.

First-quarter capital expenditure jumped to $17.2bn, up from $12bn last year and slightly more than the $17.1bn estimate. It has forecast spending will reach $75bn this year, up from $53bn in 2024.

The company still faces challenges having lost a succession of antitrust cases brought by US regulators against its search, digital advertising and play app store businesses. It could be forced to sell its Chrome browser, end an exclusive search engine partnership with Apple and share more data with rivals.