In an exciting development for investors, Alphabet, the parent company of Google, has announced its first-ever dividend, along with a $70 billion stock buyback. The news has sent the company's shares soaring nearly 16% after the market closed.

Alphabet's decision to return capital to its shareholders comes at a time when the tech giant is also investing billions of dollars in data centers to compete with rivals in the field of generative artificial intelligence. The dividend payout will amount to 20 cents per share, providing an additional incentive for shareholders.

This move follows the announcement made by Alphabet's Big Tech rival, Meta Platforms, just three months ago, where it also introduced its first-ever dividend. That decision greatly impacted Meta's stock market value, causing it to rise by a staggering $196 billion the following day. As for Amazon.com, it remains the only holdout among the major tech firms, as it has not yet offered a dividend.

Alphabet has not only managed to beat expectations for the quarter in terms of sales, profit, and advertising, but also exceeded the closely watched metrics. Industry analysts, such as Thomas Monteiro, a senior analyst at Investing.com, believes that the combination of the dividend payouts, stock buybacks, and solid earnings beat showcases Alphabet's intelligent strategy heading into what could potentially be a challenging time for the tech market.

The positive news has also had a significant impact on Alphabet's stock market value, which has now surpassed $2 trillion, thanks to an increase of approximately $300 billion following the after-hours trading surge.

During a call to discuss the results, Alphabet CEO Sundar Pichai highlighted the company's AI offerings as being instrumental in boosting its core search results. Pichai expressed encouragement in seeing an increase in search usage among users who are utilizing AI overviews.

The impressive first-quarter revenue for Alphabet amounted to $80.54 billion, surpassing the estimated $78.59 billion, according to LSEG data. The remarkable beat was primarily driven by the rising demand for Alphabet's cloud services, spurred by the adoption of artificial intelligence and consistent advertising spending. Advertising sales alone grew by 13% to reach $61.7 billion, beating the average estimate of $60.2 billion.

Alphabet faced some challenges in the fourth quarter, as its ad sales fell short of expectations, leading to a decline in share prices. The company encountered increased competition from Amazon.com, Facebook, and emerging platforms like TikTok. However, following President Joe Biden's recent bill that may potentially ban TikTok if not sold within the next year, its future remains uncertain.

Despite this, Google Cloud revenue saw significant growth of 28% in the first quarter, largely propelled by the increasing demand for generative AI tools that rely on cloud services. This demonstrates the attractiveness of Alphabet's cloud services to venture capital-backed startups developing AI technologies, due to their competitive pricing and seamless integration capabilities.

Alphabet's capital expenditures for the quarter amounted to $12 billion, a substantial 91% increase from the previous year. CFO Ruth Porat admitted that this figure was higher than anticipated. However, Porat also mentioned that such expenditures are expected to remain at this level or even higher throughout the remainder of the year, as the company continues to invest in building its AI offerings. Despite the surge in expenses, Porat forecasted that the operating margin in 2024 would be higher than the previous year, without providing further details.

Alphabet's AI-powered chatbot, Gemini, has been praised as a valuable tool for automation purposes, ranging from coding to document creation. However, the software faced criticism when it generated historically inaccurate images, including those of former U.S. leaders and World War Two-era German soldiers. Alphabet has acknowledged these issues and is actively working to address them.

With the successful quarter, the introduction of a dividend, and a stock buyback program, Alphabet has solidified its position as a leading player in the technology industry. The company's strategic focus on AI and cloud services seems to be paying off, as it continues to outperform expectations and deliver strong financial results.