Google-parent Alphabet is rising after its earnings report (GOOGL)

Alphabet reported first quarter earnings that beat analyst expectations on Monday.
The stock is surging after-hours.
Follow Alphabet's stock price in real-time here.

Shares of Alphabet, the parent company of Google, surged as much as 4% after the company reported first quarter earnings that beat expectations, but then quickly retreated back to gains of less than 1%.

For the first quarter of 2018, the search engine giant posted adjusted earnings of $13.33 per share where analysts had expected $9.30, on revenues (ex-traffic acquisition costs) of $24.9 billion, where analysts had expected $24.5 billion.

"Our ongoing strong revenue growth reflects our momentum globally, up 26% versus the first quarter of 2017 and 23% on a constant currency basis to $31.1 billion," said CFO Ruth Porat in a press release. "We have a clear set of exciting opportunities ahead, and our strong growth enables us to invest in them with confidence."

Shares of Alphabet are flat for 2018 so far as worries about online privacy and regulatory risks weigh on the stock.

"If there is structural risk rising to the leading Internet Platforms, it is likely to come from government," RBC Capital Markets analyst Mark Mahaney said in a note ahead of the earnings report. "And that risk does seem to be rising. Based on numerous discussions with investors, we believe the market may be under-appreciating the regulatory risk facing GOOGL."

This is the first earnings season since the Tax Cuts and Jobs Act was signed into law by President Donald Trump. Like many other companies reporting this quarter, Alphabet said its effective tax rate dropped, from 20% last year to 11% for the first quarter.

The report was also Wall Street's first look into Google's Nest business, the smart-thermostat and other digital home appliances maker that it bought for $3.2 billion in 2014. The unit $112 million in revenue in the first quarter of 2018, it said.

Join the conversation about this story »

NOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown