Topline
Google parent Alphabet stock climbed Wednesday to its highest level since late July after the company toppled Wall Street’s expectations in its third-quarter earnings report which revealed record profits and revenues for the search engine giant.
Google Headquarters in Mountain View, California.
Key Facts
Shares of Alphabet rallied almost 7% by midmorning, adding more than$130 billion in market capitalization as the stock got a boost from bumper third-quarter results shared after Tuesday’s market close.
The “impressive” report, as described by Rosenblatt analyst Barton Crockett, included $88.3 billion in revenue, with $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.
And 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 was 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.
Key Background
Alphabet stock had actually underperformed the S&P 500 over the last 12 months through Wednesday, 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 $12 trillion, or more than a fifth, 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.
Surprising Fact
It was a dismal day for other big companies who reported earnings since the end of Tuesday’s trading session, including for Advanced Micro Devices and pharmaceutical giant Eli Lilly, whose shares tanked more than 8% apiece.