Search engine giant reports record profits and sales of $66 billion in ad revenue

On By Littum

Upper line

Google parent Alphabet toppled Wall Street expectations in its third-quarter earnings report on Tuesday, the first domino to fall in a crowded week for big tech earnings.

Key facts

Alphabet reported $88.3 billion in revenue, including $65.9 billion in its primary Google advertising business, compared with average analyst expectations of $86.4 billion in total sales and $65.4 billion in ad revenue.

The Internet giant generated $2.12 in earnings per share and $26.3 billion in net income, compared with estimates of a profit of $1.84 per share. share and a net profit of $22.9 billion.

It’s Alphabet’s best sales figure ever, topping the $86.3 billion it brought in during the fourth quarter of 2023, and its best earnings metric ever, topping the previous record of $23.7 billion in Q1 2024.

Shares of Alphabet rose more than 3% in limited trading after the earnings announcement, after rising 1.7% in regular trading hours on Tuesday.

Key background

Alphabet stock has actually underperformed the S&P 500 over the past 12 months, rising 37% compared to the benchmark index’s 40% over the period, underperforming digital adrival Meta by 96% and cloud computing rival Amazon by 44%. Factors weighing on Alphabet’s share price include concerns about antitrust investigations globally and on negative impact on profits 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 around 25% market share in the global digital advertising market, according to 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 look for

The other West Coast tech giants Amazon, Apple, Meta and Microsoft will report their third-quarter results after Wednesday and Thursday’s respective market closes in a busy week for big tech. These five companies account for about $11 trillion, or 21%, of the S&P 500’s total market capitalization of $52 trillion, which in turn has an overall impact on the direction of the stock market overall.