Google owner Alphabet benefits from new internet boom

by Lee Wild from interactive investor |

Share on:

The search engine giant is making record profits as even more of us take to the web and more often.

It would have been foolhardy to bet against Google over the past decade. And parent company Alphabet (NASDAQ:GOOGL) has further cemented its position as one of the world’s largest and most significant companies after more than doubling first-quarter profit and smashing Wall Street forecasts. This has forced analysts to quickly rethink their forecasts, leading to significant upgrades to estimates for this year and next.

Alphabet shares were up as much as 5% following last night's Q1 results, breaking above $2,400 for the first time in after-hours trade.

Its incredible recovery from the early pandemic sell-off is no surprise given the popularity of the iconic Google search engine. The digital revolution, accelerated by coronavirus, has also been a significant boon for its much smaller but fast-growing cloud business. 

Revenue surged by more than expected, up 34% to $55.3 billion in the first quarter, much of which came from the core Google advertising division, and margins were off the scale. That meant a net profit of over $17.9 billion compared with a comparatively modest $6.8 billion a year ago, and earnings per share of $26.29 made a mockery of timid Wall Street estimates.

A 49% increase in revenue at YouTube is exciting and there is further growth potential here. A $50 billion share buyback programme should also go some way to underpinning the share price.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

get more news and expert articles direct to your inbox
Sign up for a free research account and get the latest news and create your own Virtual Portfolio