Alphabet shares surged following the company’s first-quarter earnings report, which revealed strong double-digit growth in revenue and profit. The performance was propelled by continued strength in Google’s search business and an accelerating demand for AI related cloud services.
For the three months ending 31 March, Alphabet reported a 12% rise in revenue, reaching $90.2bn (£67.8bn), while net income surged 46% to $34.5bn, compared with the same period a year earlier. Both figures surpassed analysts’ expectations, alleviating concerns over the company’s ability to navigate ongoing trade tensions and the potential impact of a looming US recession.
Google’s core search and advertising business was the primary driver, growing 9.8% year-over-year to $50.7bn, exceeding earlier forecasts of an 8-9% increase. Alphabet’s “Search and other” segment, which includes advertising revenue, benefited from the growing integration of AI technologies. The company highlighted that its AI Overviews tool, which appears at the top of Google’s search results, now reaches 1.5 billion users per month, a sharp rise from 1 billion users in October.
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Alphabet's adjusted earnings per share, excluding one-time gains, stood at $2.27, above the consensus estimate, according to data from LSEG. The company also reported $12.26bn in revenue from its cloud computing business. Though slightly below the $12.27bn anticipated by analysts, the cloud unit saw a 28% year-over-year growth, with margins expanding to 17.8% from just 9.4% in the previous year.
Despite the strong performance, Google's chief business officer Philipp Schindler told analysts during a conference call the company was not immune to macroeconomic uncertainty.
"The changes to de minimis exemption will obviously cause a slight headwind to our ads business in 2025, primarily from APAC (Asia Pacific)-based retailers," he said, referring to Donald Trump's order this month to end a trade rule allowing low-value packages from China and Hong Kong to enter the US free of duties.
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Shares in Intel fell more than 5% in pre-market trading following the company's bleak forecast for both revenue and profit, sending ripples of concern through the semiconductor sector. Investors are increasingly wary of the challenging environment facing the chipmaker, which has been exacerbated by the ongoing US-China trade tensions.
Intel expects second-quarter revenue to range between $11.2bn and $12.4bn, marking a potential year-over-year decline of up to 12%. The company cited the economic strain from tariffs and inflation as major factors contributing to the negative outlook.
“We believe Q1 revenue benefited from customer purchasing behavior in anticipation of potential tariffs,” CFO David Zinsner said during the company’s earnings call. "This year could be choppy depending on what ultimately is settled across the US and abroad."
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For the first quarter of 2025, Intel reported revenue of $12.67bn, a slight decrease of 0.5% compared to the same period last year. Earnings per share (EPS) came in at $0.13, down from $0.18 in Q1 2024.
In response to mounting pressures from slower growth and volatile market conditions, Intel is overhauling its organisational structure. The company is focusing on reducing complexity and improving operational efficiency.
CEO Lip-Bu Tan said: "Organisational complexity and bureaucracies have been suffocating the innovation." As part of the restructuring, he announced a flattening of Intel’s leadership team, with all critical product, manufacturing, and general and administrative functions now reporting directly to him.
While Intel did not disclose specific details regarding layoffs, reports from Bloomberg suggest the company is preparing to cut up to 20% of its global workforce. Intel has indicated that it may take until July to finalise the number of job cuts.
Looking ahead, Intel has lowered its operating expense target for 2025 to $17bn, with plans to reduce it further to $16bn by 2026.
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Shares in Facebook’s parent company were 3.8% higher ahead of the US opening bell amid reports that it has laid off employees in its Reality Labs division that is tasked with developing virtual reality, augmented reality and related wearable devices.
The layoffs affected teams working on Quest headsets and specific titles such as Supernatural, a VR fitness game acquired by Meta for more than $400m, The Verge reported. Meta’s Reality Labs division logged an operating loss of $4.97bn while scoring $1.1bn in sales during the fourth quarter, the company said in January.
The cuts to Reality Labs come after Meta in February announced it was cutting off 5% of its overall workforce that it deemed to be its lowest performers.
Meanwhile, Facebook will begin lowering the reach of accounts sharing spammy content and making them ineligible for monetisation, Meta announced on Thursday. The company is also increasing efforts to remove Facebook accounts that coordinate fake engagement and impersonate others, it said.
The social media company reports earnings on Wednesday.
NasdaqGS - Nasdaq Real Time Price • USD As of 9:54:49 AM EDT. Market Open.
Shares in Novo Nordisk, the company behind weigh loss drug Wegovy, dropped almost 3% following a Reuters report that raised concerns about the company’s ability to maintain its sales momentum.
Despite a consensus of 25 analysts polled by LSEG predicting a 19% rise in Novo’s 2025 sales, analysts at Bank of America are forecasting a more conservative increase, projecting guidance cuts to a range of 14%-22%. This would mark the company's weakest sales growth since 2021.
"I am very cautious on Novo. I definitely see the possibility of a guidance cut," said Lukas Leu, a portfolio manager at Bellevue Asset Management, which holds Novo shares.
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The company’s struggles are partly driven by intense competition in the obesity drug market, particularly from rival Eli Lilly (LLY), as well as disappointing trial data for its next-generation drug, CagriSema. These issues have contributed to a dramatic $230bn, or 45%, drop in Novo's market value since early December.
Several analysts and investors suggest that even the revised growth expectations may be overly optimistic, with some predicting a further guidance reduction when Novo reports its first-quarter results on 7 May.
Lucy Coutts, investment director at wealth manager JM Finn and a Novo shareholder, noted that analysts are divided on the outlook. "The market is hoping for positive news...but the shares are priced for disappointment."
A slowdown in advertising spend by the world’s largest brands, coupled with ongoing concerns about the health of the global economy, has caused a steeper-than-expected decline in WPP's underlying revenue since the start of the year.
The FTSE 100 (^FTSE) company, one of the world’s largest advertising groups, reported a 2.7% drop in revenue less pass-through costs — a key industry measure — falling to £2.5bn for the first quarter. This was worse than the 2.5% decline anticipated by City analysts. Overall, group revenue dropped 5% year-on-year to £3.24bn, or 0.7% on a like-for-like basis.
WPP CEO Mark Read attributed the decline to macroeconomic challenges and the timing of new business wins, noting that the company expects a similar trend to continue into the second quarter.
However, Read remained cautiously optimistic for the remainder of the year.
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“While WPP is not itself directly affected by tariffs, they will impact a number of our clients as well as the broader economy. At this point we have not seen any significant change in client spending and we reiterate our full-year guidance which already reflected a challenging environment,” Read said.
WPP's share price has struggled to recover since its 17% drop in February, falling 31.95% over the past six months, as investors continue to weigh the company's performance amid a more challenging advertising market.
Mark Crouch, market analyst at Etoro, said:“The advertising group's shares have plummeted in 2025 and exposure to China has been pointed out to be the reason for the amplified decline. With 20% of WPP's revenue coming from China, the steep drop-off in performance in the region has hurt the business.
"Perhaps most concerning for WPP shareholders is the lack of resilience that the company has shown in view of the uncertainty. While profits have been sliding, they've arguably been through harder times in the past, most recently COVID. It will concern investors if they have not learnt lessons on how to shore things up in case a similar situation arises.”
Other companies in the news on Friday 25 April
Record (REC.L)
Holcim (HOLN.SW)
AbbVie (ABBV)
Abbott Laboratories (ABT)
HCA (HCA)
Colgate-Palmolive (CL)
Aon (AON)
Schlumberger (SLB)
Phillips 66 (PSX)
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