The stock falls in the after-hours market -6% as the cloud business grows below consensus expectations.
Analysis of Alphabet’s latest results.
Key figures vs. consensus (Bloomberg):
- Sales: $64,051 million vs. $63,044 million expected.
- EBIT: $21.343 billion vs. $21.471 billion expected.
- EBIT: US$19,689 million vs. US$16,536 million expected.
By segment, the performance is good in all areas, although the figures for Google Cloud, which grew +22.5%, disappointed the market, which was expecting growth of +25%. The search engine business (Google Search & Others), which remains the company’s main source of revenue (58% of the total), managed to maintain growth of 11%.
Opinion of Alphabet’s (Google) results
Alphabet’s figures were positive, and demonstrate that the company’s traditional online advertising business is evolving strongly. On the other hand, the disappointment in the Cloud business caused the market to react negatively in the afterhours market with a drop of -6%. The weight of this business is still low (just 11% of revenues) but the future growth of the business is expected to be based on this area. Despite the market’s reaction, we continue to consider Alphabet as a stock with good future prospects and attractive to hold in the portfolio for the medium term.