What happened
Google parent actions Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) it rushed out on Wednesday, rising 6% in the first 10 minutes of trading in response to a loss of profits announced yesterday.
Towards earnings, analysts estimated Alphabet would record $ 15.90 per share in fourth quarter earnings from sales of $ 53.1 billion, but the company surpassed both numbers, with earnings per share of $ 22, 30 on sales of $ 56.9 billion.
Image source: Getty Images.
And
Fourth quarter sales grew 23% year over year, with service revenue growing 22% and cloud revenue growing more than twice as fast, 46%. Gains calculated in accordance with generally accepted accounting principles (GAAP) increased 45% year on year.
The quarter marked a significant acceleration of Alphabet’s performance at the beginning of the pandemic, giving hope that this story is improving, not getting worse. For the full year, Alphabet’s sales increased by just 13% compared to fiscal 2019 and profits only 19%.
What now
The momentum looks set to continue until 2021, with management noting that retail Internet searches by consumers almost tripled year after year in the fourth quarter, while corporate buyers responded to the revived interest by spending more on digital advertising.
CFO Ruth Porat says the company has “significant ongoing momentum” and Wall Street seems to agree. As of this morning, more than a dozen analysts have raised their Alphabet stock price targets, according to TheFly.com. Among them: Pivotal Research, which took a look at what it called one of the strongest quarterly surprise surprises in recent memory, and reached a maximum price target of $ 2,750 per share on the stock being traded less than US $ 2,100.
Analysts seem to have no doubts about the direction Alphabet’s shares are taking, and this morning, investors agree.