Google shares fell in after-hours trading on Thursday as the Internet giant's earnings came in slightly below Wall Street expectations, dragged down by rising operating expenses.

The Mountain View, California-based Google reported a first-quarter net profit of $2.3 billion, up from $1.96 billion a year ago.

Net revenue rose 29 percent to $6.54 billion in the quarter which ended on March 31, better than the $6.32 billion expected by analysts, but earnings per share of $8.08 came in below the forecast of $8.11.

Google shares fell 5.36 percent to $547.50 in after-hours trading as investors appeared to be concerned about the surge in operating expenses.

Google said operating expenses were $2.84 billion in the first quarter, or 33 percent of revenue, compared to $1.84 billion in the first quarter of 2010, or 27 percent of revenue.

Google said it added nearly 2,000 full-time employees in the quarter, taking the total to 26,316 as of March 31.

Google has announced plans to hire a record 6,000 workers this year as it does battle with rising social networking stars such as Facebook and Twitter.

New chief executive Larry Page, the Google co-founder who replaced Eric Schmidt last week, has made social a priority at the Internet search giant.

Google chief financial officer Patrick Pichette focused on the increased revenue in a statement and said investment was needed to position Google for the future.

"We had a great quarter with 27 percent year-over-year revenue growth," Pichette said.

"These results demonstrate the value of search and search ads to our users and customers, as well as the extraordinary potential of areas like display and mobile," he said. "It's clear that our past investments have been crucial to our success today -- which is why we continue to invest for the long-term."

In a conference call with financial analysts, Pichette said operating costs were also impacted by a 10 percent across-the-board salary hike for "Googlers" at the beginning of the year.

Google also said Thursday that 350,000 mobile devices running the company's Android software were being activated every day around the world and that three billion Android applications have been downloaded.

Page made only a brief appearance on the conference call, thanking outgoing CEO Schmidt and Jonathan Rosenberg, the company's chief of product development who resigned last week, before turning over the call to Pichette.