Google parent Alphabet spikes 6% after smashing 4th-quarter expectations on digital ad sales during the holiday shopping quarter
- Google parent Alphabet rose 6% after posting strong Q4 earnings that beat Wall Street expectations.
- The company's fourth-quarter revenue rose 23% to $46.43 million, driven by strong advertising growth.
- Alphabet revealed results from Google's Cloud business for the first time ever.
Shares of Google-parent Alphabet rose 6% on Wednesday after the company posted strong earnings in the holiday shopping quarter, exceeding analyst expectations.
Fourth-quarter revenue rose to $46.43 billion, up 23% from a year ago. Analysts, on average, expected revenue of $44.14 billion.
YouTube delivered a 47% jump in advertising growth from last year, bringing in revenue of $6.89 billion, compared to analyst expectations of $6.22 billion. For the first time this quarter, the company provided a look at how its Cloud division is faring, showing that the business brought in $3.83 billion, again handily beating estimates.
Alphabet's results demonstrate the strength of Google's business model and its resilience in a time of crisis, according to Christopher Rossbach, CIO of asset management company J. Stern & Co. "With the vaccine rollout, there should be improved demand for both travel and local adverts, both important verticals for Google search. This should accelerate advertiser revenue growth," he said.
Rossbach said additional disclosure of the Cloud business is a further catalyst towards unlocking the investment case for Alphabet as investors have extra information on the company's overall profitability.
Aside from the Cloud business being the company's key profit driver, investors were also glad to see Alphabet's core advertising business bouncing back, said Milan Cutkovic, market analyst at AxiCorp.
"The tech rally is giving the broader market a much-needed boost and Wall Street could soon hit new record highs," he said.
Alphabet's stock was trading around $2,040 per share on Wednesday.