Alphabet Rallies After Great Q4 Report

Alphabet Video 03.02.21.

Alphabet Shares Get To All-Time High Levels

Shares of Google’s parent company Alphabet are gaining about 7% in today’s trading session after the release of the fourth-quarter earnings report.

Alphabet reported revenue of $56.89 billion and GAAP earnings of $22.30 per share, easily beating analyst estimates on both earnings and revenue.

The rebound in the advertsing spending provided a boost for Alphabet’s revenue as the activity of businesses and consumers continue to increase. The growth in YouTube ads was especially strong.

Not surprisingly, many analysts rushed to update their price targets for Alphabet shares. The market agrees with the analyst community as Alphabet stock managed to settle above the psychologically important $2000 level and made an attempt to get to the test of the $2100 level.

What’s Next For Alphabet?

The economic recovery will continue in 2021 so the company’s ad business will likely benefit from the improved performance of the world economy as businesses will have more money to spend on ads.

In addition, certain segments of the ad market have the potential for a rapid growth of ad spending once the situation with coronavirus improves. Travel-related spending will surely grow once countries fully open their borders and tourists are able to safely enjoy their trips.

While skeptics may point to the company’s rich valuation at a forward P/E of more than 30, such valuation looks normal for a leading tech company in the current market environment, and Alphabet shares may have more room to run while analysts adjust their earnings estimates to the upside.

There was a lot of talk about the regulatory challenges faced by Big Tech in recent months, but Alphabet’s strong financial performance and solid outlook will likely offset such worries in the near term. Increased regulation is surely a risk for the longer-term, but it remains to be seen whether regulators will be able to move fast enough to have any notable impact on Big Tech stocks, including Alphabet.

For a look at all of today’s economic events, check out our economic calendar.