Just as Apple did with its stellar 4th quarter results, search and video giant Alphabet (Google) has blown up the idea that tech companies have peaked as investment ideas.
Thanks to surging ad sales and search revenue, Alphabet produced record revenues and earnings for the December quarter.
Alphabet’s quarterly profit was $US20.6 billion – up a third from $US15.22 billion earned in the final three months of 2020.
The December 2021 quarter was the fourth-straight record quarterly profit after the company struggled in 2020’s confusion of the first wave of Covid-driven lockdowns and reduced levels of advertising.
Shares of Alphabet rose 6.4% during after-hours trading to $US2,930. The company also announced on Tuesday a 20-for-one stock split (applicable to its class A, B and C shares) that, if approved by shareholders, would come in July.
The company had two-for-one split in 2014 when it became Alphabet.
Ad sales, including a jump in YouTube and Google Search drove 4th quarter earnings for parent Alphabet.
YouTube advertising revenue surged 25% to $US8.6 billion (which is more than Netflix’s $US7.1 billion 4th quarter revenue). Total advertising revenue rose 32.5% to $US61.2 billion.
Sales from search leap more than a third to $US43 billion vs $US31.9 billion in the December, 2020 quarter.
Alphabet saw total revenue rise of $US75 billion, up more than 30% from $57 billion a year earlier.
Google Cloud, Alphabet’s late entry into the cloud business – well behind the likes of Amazon, Microsoft, Apple, Oracle, OVM and others – reported sales of $US5.5 billion sales from $US3.8 billion.
For the year the company boosted revenue a massive 41% to more than $US257 billion while net income for the year almost doubled – a rise of more than $US36 billion to $US76 billion from 2020’s $US40.26 billion.
Investors think the likes of Apple and Alphabet, not to mention meta (Facebook), Amazon and Microsoft will struggle in coming months and years as interest rates rise and monetary policy is more normalised.
But the facts are all these giants became what they are in periods of rising interest rates and, while the Covid emergency of low rates and central bank largesse have helped, these giants are now so embedded in everyday lives of consumers and business that their performance, while it might slow, will tell us a lot about the health and strength of the wider economy.
Apple, Microsoft (and big pharma’s J&J) are now AAA-rated companies – the only companies with that now rare ranking (and equal to the rating for Australia, but not the US – which is AA + from S&P).
