Google Parent Alphabet Leaves Wall Street Analysts in the Dust

Investors were skittish ahead of earnings out of big tech companies. All eyes have been on technology earnings, as the sector has been helping to fuel the market higher and investors want to know if it can last.

Google parent Alphabet has just reported its Q2 results, and the tech giant didn’t disappoint. After the stock fell 2% in the regular session, shares are up approximately 3% in extended-hours trading.

Beat the Street

Investors are celebrating Alphabet for beating estimates on the top and bottom lines. The company reported EPS of USD 27.26 vs. estimates of USD 19.34. Meanwhile, revenue came in at USD 61.88 billion while Wall Street analysts were calling for about USD 56 billion.  With a massive market cap of USD 1.79 trillion, Google/Alphabet is growing at a pace that is akin to a tech unicorn.

Google and Alphabet CFO Ruth Porat stated:

“Our strong second-quarter revenues of USD 61.9 billion reflect elevated consumer online activity and broad-based strength in advertiser spend.” 

Ad Revenue Race Is On

Online advertising is booming as businesses spend on internet ads with a vengeance now that the economy has officially reopened. Companies like Snap Inc. already reported robust ad revenue for Q2, teeing up Alphabet to take the baton. Now the race is on.

Google’s online ad revenue soared nearly 70% in Q2 vs. year-ago levels to USD 50.4 billion. YouTube’s ad revenue alone came in at USD 7 billion, soaring 84% YoY and topping Wall Street estimates.

Google Cloud revenue came in at USD 4.63 billion, also better than expected. Google has been investing in artificial intelligence and the cloud. Alphabet also recently got the green light for a USD 50 billion share repurchase program of Class A and Class C shares.

If tech stocks continue to work their magic, they could potentially carry the market higher on Wednesday and beyond.

The gains in Alphabet’s shares come on the heels of a bullish performance in which the stock has advanced 50% so far this year. Meanwhile, tech giants Microsoft and Apple also reported earnings after the bell, but both stocks are moving lower in after-hours trading.

Investors might want to take note that the strong online ad sales market is expected to persist. GroupM is reportedly predicting global ad sales will be USD 749 billion in 2021, up by a double-digit percentage vs. year-ago levels. Tech stocks such as Alphabet could potentially continue to benefit from this trend.