Alphabet, Google’s parent company, beat fourth-quarter sales expectations as the search giant’s internet advertising, cloud computing and hardware businesses benefited from holiday shopping, pushing shares higher more than 7% in after-hours trading.
The findings are the latest to signal that the global trend towards a more digital economy has made “big tech” companies resilient to small market shocks.
As worries about rising inflation, Covid-19 variants and supply chain shortages have rattled Wall Street and hurt sales for some companies, the companies that control major gateways to the web n haven’t seen a decline since the early days of the pandemic.
Alphabet’s overall quarterly sales jumped 32% to $75.3 billion (A$105.5 billion), above the average estimate of $72 billion from financial analysts tracked by Refinitiv.
Google’s total revenue came in at $74.9 billion, above estimates of $71.652 billion.
Alphabet also announced a 20-for-1 stock split, in which shareholders starting July 1 this year will receive a dividend of 19 additional shares. Shareholders must approve the split.
Alphabet’s chief financial officer, Ruth Porat, told CNBC that the company aims to make stocks accessible to more traders.
The company’s third straight quarter of record sales reflects growth in Google’s ad-laden services like web search, email and YouTube video streaming since the pandemic hit. hybrid work and e-commerce customary in much of the world.
Google generates more revenue from Internet advertisements than any other company.
Google had said that in the third quarter it lost sales because companies lacked marketing and the iPhone’s new privacy measures reduced its ability to track users online.
In the fourth quarter, ad revenue rose 32.5% to $61.2 billion from an average estimate of $57.1 billion.
Main rival Meta Platforms, owner of Facebook, will publish its financial results tomorrow.
Shares of Meta, Twitter and Snap all rose after Alphabet released its results.
Others, including Amazon.com and ByteDance’s TikTok, have taken small shares from Google in the global advertising market.
Although market forecasters expect the trend to continue over the next few years, they don’t expect a major slippage from Google’s leadership position.
Google’s secondary businesses, including Cloud, also increased their overall sales.
Google Cloud, which trails Amazon and Microsoft in terms of cloud services market share, increased its revenue by 45% to $5.5 billion, above estimates of $5.4 billion.
Alphabet also announced record quarterly sales during the holiday season for its Google Pixel smartphones despite supply constraints.
Alphabet’s quarterly profit was $20.6 billion or $30.69 per share, beating expectations of $27.56 per share and marking a fourth straight quarter of record earnings.
Alphabet’s earnings are benefiting from unrealized gains from its investments in startups, and the company also received a $2 billion boost last year from extending the useful life of its servers and of its network equipment.
For all of 2021, Alphabet increased its profits by 89% to $76 billion. Sales were up 41% from 2020, when sales grew just 13%, the slowest in more than a decade, due to reduced advertiser spending in the first weeks of the pandemic.
Alphabet’s total costs in 2021 rose 27% to US$178.9 billion as the company began to resume its pre-pandemic hiring and construction pace.
Programming licenses for YouTube and data center expansion also drove up costs.
Alphabet increased its cash position by nearly $3 billion in 2021 to $139.6 billion.
Alphabet shares have gained 43% in the past 12 months and are down nearly seven percent since the start of the year on Tuesday – both swings bigger than the market as a whole, as the rise in inflation and geopolitical concerns have thrown big stocks out of favor.
Numerous lawsuits accusing Google of anti-competitive behavior in the advertising and mobile app store markets continue to be one of the biggest challenges the company faces.
Google has previously said that its efforts to reduce Play app store fees to assuage some of the concerns will hurt revenue.