Alphabet Inc Cl A
Alphabet Inc Cl A
IBD Stock Analysis
- Shares rebounded Wednesday off their 50-day moving average
- Stock broke out from official flat base with a buy point at 2,925.17
- Shares also offered an early entry point at 2,873.35, last week’s high
Industry Group Ranking
* Not real-time data. All data shown was captured at
12:49PM EDT on
Google-parent Alphabet (GOOGL) is the IBD Stock of the Day as the internet search leader shows resilience amid woes at other large-cap technology stocks. Google stock broke out Wednesday as shares surged amid its September-quarter earnings beat.
GOOGL stock on Wednesday rebounded off its 50-day moving average. With the move, it offers an early entry point of 2,873.35 — 10 cents above last week’s high. Google stock also blew past its official flat base entry point of 2,925.17. Shares jumped 6.5% to 2,967.40 in afternoon trades.
“GOOGL stock has clearly been the most liked, best owned, and least debated megacap internet name, as reflected in its 60% share appreciation year to date,” JPMorgan analyst Doug Anmuth said in a report to clients. “As a result, the bar for GOOGL going into earnings this quarter was higher than for others.”
GOOGL stock late Tuesday reported September-quarter earnings and revenue that handily beat analyst estimates. While internet search advertising revenue came in above expectations, YouTube and cloud computing sales were light.
Google Stock: Less Apple Impact
“Alphabet reported enviable Q3 results, managing to sidestep the digital ad pitfalls experienced by leading social media platforms this earnings season,” Brian White, analyst at Monness, Crespi, Hardt & Co., said in his note to clients.
Google earnings under generally accepted accounting principles, also known as GAAP, jumped 71% to $27.99 per share, including gains on equity investments. Gross revenue rose 41% to $65.12 billion.
Analysts had estimated Google earnings of $23.73 per share on gross revenue of $63.5 billion.
The company said net revenue, minus traffic acquisition costs, came in at $53.63 billion vs. estimates of $52.07 billion. Traffic acquisition costs jumped 40% to $11.49 billion.
Internet search and other revenue rose 44% to $37.93 billion vs. estimates of $36.41 billion.
Cloud Computing Revenue Growth Slows
Google said cloud-computing revenue rose 45% to $4.99 billion vs. estimates of $5.17 billion. Despite the revenue miss, Google cloud cut its operating loss almost in half to $644 million.
YouTube advertising revenue rose 43% to $7.2 billion. Analysts had estimated YouTube ad revenue of $7.42 billion.
“Despite a few blemishes, Google overall (posted) a strong Q3, which looked even better vs. online media peer misses,” Bank of America analyst Justin Post said in a note.
Parent Alphabet repurchased $12.6 billion of GOOGL stock in the quarter — about the same as in the second quarter. Google stock, though, could face tough year-over-year comparisons in the December quarter, RBC Capital analyst Brad Erickson said in a note.
“The multiple is on the richer side and some tougher comps are coming up, but given the especially attractive Covid rebound exposure, ever-rising YouTube engagement and monetization, and Google Cloud’s march toward profitability, we see solid reasons to own the name,” Erickson said.
Meanwhile, Google’s Relative Strength Rating is 86 out of a best possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.
Google Stock: Institutional Ownership
However, institutional ownership has weakened.
Google stock owns an Accumulation/Distribution Rating of only D. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.