Alphabet Q2 Results: Will strong profits, robust ad sales drive Alphabet share price higher?
Alphabet (Google) share price soared about 8% in after-market trading on July 25, 2023 and around 6% in pre-market trading on July 26, 2023 after the technology major reported quarterly earnings of $1.44 per share, beating analyst expectations of $1.34 per share.
The search engine and cloud service provider reported revenue of $74.60 billion, which was 7% higher from a year ago, which was also higher than average expectations. Strong ad sales and robust rise in Google cloud revenues.
Alphabet share prices have gained about 37% so far this year, according to data up to the closing session of July 25, 2023 and surged nearly 95% over the past five years, marking it to be among the top performing stocks in the Nasdaq100.
Mega-cap technology shares have had a stellar run since March this year over expectations of the US Central Bank halting its interest rate hike cycle amid cooling inflation pressures.
Alphabet Q2: Historical share price performance
(Data as on July 25, 2023)
The stock’s share price also got a fillip from the appointment of Ruth Porat at the position of chief investment officer and President from her current position as CFO. Before joining Alphabet, Porat held the position of finance chief at Morgan Stanley.
Alphabet Q2: Revenue
|Q2 2023||Q2 2022||% change|
|Total Revenue||$74.6 billion||$69.7 billion||+7%|
Alphabet’s revenue rose 7.1% to $74.60 billion from a year ago; analysts expected $72.78 billion! A strong jump in ad sales and steady demand for its cloud services, pushed revenues higher.
For instance, Ad sales for Google's YouTube video service unit rose 4.4% to $7.67 billion. Advertising, which dominates a majority share in Google’s total revenues, has seen a steady gain as advertisers have somewhat slowed spending on smaller platforms, leaving a large chunk of the advertising pie to large players like Google and Meta.
Alphabet Q2: Revenue Breakdown
|Segment||April- June 2023||April to June 2022|
|Google Search||$42.6 billion||$40.7 billion|
|YouTube Ads||$7.6 billion||$8.3 billion|
|Google Network||$7.9 billion||$7.3 billion|
|Google Cloud||$8 billion||$6.3 billion|
|Hedging Gains||$3 million||$373 million|
|Others||$8.4 billion||$6.8 billion|
Alphabet Q2: Net Profit
|Q2 2023||Q2 2022||% change|
|Net Profit||$18.4 billion||$16 billion||+15%|
Alphabet’s net profit for the period tallied to $18.36 billion, up from the $16 billion profit reported in the corresponding quarter last year.
Investors have been keeping keen attention towards the development of generative AI tools and services. Google launched a host of AI services with its AI chatbot Bard at the forefront. Google also revamped its search engine to include its generative AI chatbot.
Alphabet Q2: Dividends
Alphabet did not release any dividend during the quarter.
Alphabet Q2: Analyst View
- Broker Mizuho has a ‘buy’ call on the stock and raised its share price target 155 from $135
- Broker Guggenheim has a ‘buy’ call on the stock and raised its share price target on the stock to $150 from $125.
- Broker Barclays has a ‘buy’ call on the stock and raised the share price target on the stock to $200 from $160
- Broker Oppenheimer raises its share price target on the stock to $160 from $145.