Alphabet topped Wall Street's earnings targets by 66%

People around the world are relying on the company's Google searches "more than ever" during the pandemic, said CEO Sundar Pichai.

| More on:

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) crushed Wall Street's estimates with Tuesday's first-quarter earnings report, driving stock prices to fresh all-time highs.

First-quarter revenue rose 34% year over year, landing at $55.3 billion. Earnings jumped from $9.87 to $26.29 per diluted share. Your average analyst would have settled for earnings near $15.88 per share on top-line sales of roughly $51.7 billion. The targets themselves have been moving up recently. Consensus earnings estimates for this period sat at $13.84 per share three months ago, before 11 analyst firms boosted their projected earnings.

Behind the headline numbers

Some of the bottom-line gains came from an accounting adjustment. Alphabet extended the useful lives of its server hardware from three to four years while stretching the useful life of some networking equipment from three to five years. These adjustments increased diluted earnings by $0.95 per share.

The rest of the positive surprises rested on strong business results. First-quarter sales surged at least 33% higher in each of Alphabet's four geographic regions, led by a 44% gain in the Asia-Pacific region. YouTube ad sales rose 49% to $6.0 billion and Google Search revenues increased by 30% to $31.9 billion. But in general, Google search has simply become even more popular during the pandemic.

"People have turned to Google Search more than ever since the pandemic began," CEO Sundar Pichai said on the earnings call. "We see hundreds of millions of searches every day for COVID and related health information. People are also searching for jobs. To help them, job seekers can now use search to quickly and easily find roles that do not require a college degree. We are working together with top employment websites to make this service even better."

Both Class A and Class C shares of Alphabet traded 4.6% higher at 5 p.m., EDT. At these prices, the pair of FAANG stocks have gained approximately 88% in 52 weeks.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

A man looking at his laptop and thinking.
International Stock News

Why Alphabet stock was sliding today

Let's take a look.

Read more »

A man looking at his laptop and thinking.
International Stock News

Nvidia's stock was down despite its amazing earnings. Here's what history says is coming next

Although it might seem to defy logic, it's not an uncommon phenomenon.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Nvidia share price slips despite 94% revenue growth

Q3 earnings beat expectations, but what about guidance?

Read more »

high, climbing, record high
International Stock News

Could the S&P 500 Index hit 6,500 by the end of 2025?

Could the index climb higher?

Read more »

a small child holds his chin with his head on the side in a serious thinking pose against a background of graphic question marks and a yellow lightbulb.
International Stock News

Is it too late to buy Nvidia shares?

Is Nvidia stock a buy ahead of its third-quarter earnings report tomorrow?

Read more »

a group of people stand examining a large glowing cystral ball held in the hands of one of the group members while the others regard it with various expressions of wonder, curiousity and scepticism.
International Stock News

Here's what to expect from Nvidia on November 20

Can Nvidia score another win?

Read more »

Two people lazing in deck chairs on a beautiful sandy beach through their hands up in the air.
International Stock News

2 no-brainer Warren Buffett stocks to buy right now

While replicating Buffett's success isn't possible, there are a handful of his investments that are no-brainer buys.

Read more »

A man with a beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.
International Stock News

3 reasons to buy Nvidia stock before November 20

This week marks a big moment for tech investors as perhaps the most anticipated earnings of the year will be…

Read more »