Alphabet (GOOGL) Shares Surge 10% on Strong Beat, Stock Split; Analysts Bulled-Up
Alphabet (NASDAQ: GOOGL) reported Q4 earnings and revenue numbers that beat analyst consensus, sending the company’s shares up more than 9% in extended trading.
In the fourth quarter, Alphabet reported EPS of $30.69, topping the consensus estimates of $27.34, according to Refinitiv. Revenue came in at $75.33 billion, compared to $72.17 billion.
Youtube advertising revenue stood at $8.63 billion, missing the $8.87 consensus. Reported revenue for Google Cloud was $5.54 billion, vs $5.47 billion, while traffic acquisition costs (TAC) amounted to $13.43 billion, compared to the consensus of $12.84 billion.
The revenue growth in Alphabet totaled 32%, indicating the tech giant’s stability and robustness to withstand pandemic and inflation. Alphabet’s stock ended the last year up 65%, smashing all other Big Tech companies.
In addition to strong quarterly results, Google also announced a 20-for-1 stock split that is expected to take effect in July.
Alphabet reported an operating loss of $890 million for its cloud unit during the quarter, compared to a loss of $1.14 billion a year earlier. Its cloud segment was the top contributor for Alphabet’s backlog surge of more than 70% to $51 billion, said CEO Sundar Pichai. The company saw a 65% YOY increase in the number of cloud deals, Pichai added.
Revenue in Alphabet’s Other Bet subsidiaries including Waymo and Verily units generated $181 million, slightly lower than a year earlier. Google’s revenue segment that includes hardware, PlayStore and non-advertising YouTube operations reported $8.16 billion in sales, vs. $6.67 billion a year before.
Stifel analyst Scott Devitt raised the price target to $3,500.00 per share from $3,200 after witnessing another strong quarter.
“While we expect elevated investment will limit margin expansion versus 2021, we raise our margin expectations for the full year as ongoing revenue outperformance largely offsets incremental investments. We are raising our PT to $3,500 and remain Buy rated as the company continues to drive growth at scale, generate impressive FCF, and return value through ongoing share repurchases,” Devitt said in a client note.
Mizuho analyst James Lee also raised the price target to $3,600.00 per share from the prior $3,350.
“Consistent with our checks, website revenues growth came in 7 points ahead of expectations at 34% YoY due to strong holiday demand and limited impact from ad privacy policy, driven by strength in new product Performance Max, increased omnichannel shopping demand and a mix shift from TV ad spending,” Lee said.
However, the analyst still prefers Amazon (NASDAQ: AMZN) and Meta (NASDAQ: FB) over Google.
“Despite our bullish long-term view, we see tall mountains to climb over the next few quarters, comping against website revenue growth of 71% in 2Q21 and 44% in 3Q21. Would prefer to own FB and AMZN as we believe both companies have low fundamental hurdles in the back half.”
Google stock price is up 10.5% in pre-open Wednesday.
By Senad Karaahmetovic | [email protected]