Topline
Google parent Alphabet toppled Wall Street’s expectations in its third-quarter earnings report Tuesday, the first domino to fall in a crowded week for big tech earnings.
Google’s New York office.
Key Facts
Alphabet reported $88.3 billion in revenue including $65.9 billion in its primary Google advertising business, compared to average analyst projections of $86.4 billion in total sales and $65.4 billion in ad revenue.
The internet giant generated $2.12 earnings per share and $26.3 billion in net income, compared to estimates of a $1.84 profit per share and a $22.9 billion net profit.
That’s Alphabet’s best sales figure ever, topping the $86.3 billion brought in during 2023’s fourth quarter, and best profit reading ever, topping the previous record of $23.7 billion in Q1 2024.
Shares of Alphabet climbed about 5% in limited trading within an hour of the earnings announcement, having gained 1.7% during regular trading hours Tuesday.
Key Background
Alphabet stock has actually underperformed the S&P 500 over the last 12 months, gaining 37% compared to the benchmark index’s 40% over the period, underperforming digital ad rival Meta at 96% and cloud computing competitor Amazon at 44%. Factors weighing on Alphabet’s share price include concerns about antitrust probes globally and on the negative profit impact of aggressive spending in the artificial intelligence arms race. Alphabet’s stock fell 8% in the three days after its second-quarter earnings announcement despite beating analysts’ top and bottom-line estimates. Google has about a 25% market share in the global digital advertising market, according to market research firm eMarketer, and generates about twice as much in digital ad revenue as its rival Meta, the parent company of Facebook and Instagram.
What To Watch For
Fellow West Coast tech behemoths Amazon, Apple, Meta and Microsoft will report their third-quarter results after Wednesday’s and Thursday’s respective market closes in a busy week for big tech. Those five companies account for about $11 trillion, or 21%, of the S&P 500’s $52 trillion combined market capitalization, in turn wielding an outsized influence on the direction of the stock market broadly.