Alphabet's Q1 report is encouraging for the Google Pixel ecosystem

Alphabet reported its first quarter numbers on Tuesday and the parent of Google reported a small decline in advertising across all Google platforms from $54.66 billion during last year's first quarter to $54.55 billion this year. That includes a decline in YouTube ads to $6.69 billion in Q1 2023 from $6.87 billion reported during Q1 2022. Google Search ad revenue rose to $40.36 billion for the three months that ended this past March. During the same quarter last year, Google Search generated $39.62 billion in ad revenue.

Total first-quarter revenue for Alphabet amounted to $69.79 billion versus $68.01 billion last year. The company spent a little less on acquiring traffic as those costs dropped to $11.72 billion from $11.99 billion. Headcount rose to 190,711 employees versus the year-earlier 163,906. But this year's number doesn't reflect the 12,000 Google employees who were laid off in January. The number of  Googlers receiving a pink slip represented 6% of the the tech giant's workforce.

Pixel device sales are counted as part of the "Google other" segment which saw revenue rise to $7.41 billion from $6.81 billion last year. That is an 8.8% year-over-year increase. This year's first quarter would include sales of the Pixel 7, Pixel 7 Pro, Pixel 6a, and the Pixel Watch.

Alphabet and Google CEO Sundar Pichai said, "We are pleased with our business performance in the first quarter, with Search performing well and momentum in Cloud. We introduced important product updates anchored in deep computer science and AI. Our North Star is providing the most helpful answers for our users, and we see huge opportunities ahead, continuing our long track record of innovation."

Besides cutting the headcount, Alphabet CFO Ruth Porat said that the firm will be cutting real estate, employee services, and equipment for several years. The company took a $2.6 billion charge in the quarter for the layoffs and the reduction of office space. For the three months, Alphabet had $15.05 billion in net profits or $1.18 per share. That compares with the $16.44 billion that Alphabet reported in net income for the first quarter of 2022 or $1.24 per share.

For the first time, Google's cloud computing business was in the black. The business, which competes with Amazon and Microsoft, reported operating profits of $191 million versus a $706 million loss for the same quarter last year. Google also is under pressure thanks to OpenAI's ChatGPT conversational AI chatbot. Thanks to its integration with Microsoft's Bing search engine, Samsung is rumored to be considering replacing Google search on its Galaxy mobile devices with Bing instead.

Google does have its own Bard conversational AI chatbot and will figure out the best way to proceed with its rollout.

During regular trading on Tuesday, Alphabet shares dropped 2.03% or $2.17 to $104.61. After hours, the stock rebounded $1.39 to $106 after trading near $109 when the earnings report was released. At its current stock price, Alphabet has a current valuation of $1.33 trillion.