Revenue takes a hit as ad revenue soars

  • Alphabet earnings smashed it after Tuesday’s close.
  • Google’s revenue shows a big beat on the top and bottom lines.
  • Now the market is ready to recover with Facebook next.

Alphabet (GOOGL) released its results after Tuesday’s close, well ahead of expectations. Shares of Google’s parent company rallied strongly in the secondary market, and that trend continued into the wee hours of Wednesday morning. As of this writing, Google stock is up 11% in Wednesday’s premarket session. Big tech is starting to generate profits, which will help stabilize recent losses and whet risk appetite. Expect to see more gains for major indices, especially NASDAQ.

Alphabet (GOOGL) Stock Market News

Google posted earnings per share of $30.69, smashing the estimate of $27.48. Revenue reached $75.33 billion, also well ahead of estimates of $72.13 billion. The company also announced a 20-to-1 stock split, which hopefully will make it easier for people like you and me to buy a stock instead of fractions or use leverage. Currently, a stock is trading at just over $3,000, so that would be almost $150 under the new share. A more acceptable price for investors, individuals and institutions.

Ad revenue has consistently been the main driver here, with ad sales and search revenue hitting $61.2 billion, a massive increase from $46.2 billion in the prior quarter.

CEO Sundar Pichai highlighted the cloud business during the post-earnings conference call. Google Cloud revenue increased 45% from a year ago. That’s not surprising given the cloud revenue we’ve seen from other tech companies. We’re also seeing strong reading for Amazon Web Services here.

Alphabet (GOOGL) Inventory Forecast

The signals were all there for this latest move, and now all-time highs are likely in regular session. Google lost its 200-day moving average but regained it on Monday and saw further gains hold above Tuesday. The Moving Average Convergence Divergence (MACD) had also given us a bullish crossover and the Relative Strength Index (RSI) had finally woken up and moved back above 50. We needed earnings to be the catalyst, and they worked. Now the all-time highs at $3,019 are already broken during pre-market and this becomes first support.

Alphabetical table (GOOGL), daily

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Karen J. Nelson