Alphabet (Google) share price: Everything you need to know about the Q4

We examine some of the highlights from the search giant’s fourth quarter results, released after the market close on Tuesday, 2 February.

A turbulent twelve months

Despite its size and history of outsized growth, Alphabet (Google) was one of the hardest hit during the height of the pandemic.

In early and mid-2020 investors foresaw stalled economic activity cutting into ad spending, and likely worried over how such issues as well as broader market weakness may impact Alphabet. In response, the stock was sold down heavily, with GOOG hitting a 52-week low of $1,013.54 per share in March 2020.

Were those fears overblown?

In retrospect it’s easy to say yes. It’s equally easy to say that ad spend would inevitably return so the sell-off was unjustified. Yet during the height of the pandemic – with no clear vaccine in sight – no one knew the precise timing of a recovery, what it would look like or how long it would take. Uncertainty still remains around this.

It was also during this period that Alphabet revealed something that hadn’t happened in its entire corporate history. In the second quarter of 2020 – the search giant revealed its revenue had declined – the first such occurrence since its founding. For reference, the decline was 2%.

Alphabet share price: Q4 results in focus

The outlook and narrative around the company is significantly different right now. Alphabet rallied 1.38% during Tuesday’s session in anticipation of the Q4, and then gained another 7% in after-hours trade following the quarterly Q4 release.

Looking at the top-line performance here, the company beat Street revenue expectations – reporting total Q4 revenues of $56,898 million – implying a year-over-year increase of 23%.

According to Ruth Porat, CFO of Google and Alphabet, this impressive quarterly performance was ‘driven by Search and YouTube, as consumer and business activity recovered from earlier in the year. Google Cloud revenues were $13.1 billion for 2020, with significant ongoing momentum, and we remain focused on delivering value across the growth opportunities we see.’

Overall, GOOG’s total revenues for the year came in at $182,527 million, representing a year-over-year increase of 13%.

Elsewhere, Google Cloud – a closely watched business arm of the search giant – continued to impress, notching up revenues of $13,059 million at an astounding year-over-year growth rate of 46%.

This top-line performance translated well to earnings growth: Alphabet’s operating income hit $15,651 million, operating margins came in at 28%, and net income rose to $15,227 million.

Commenting more broadly on these results, Alphabet’s Chief Executive Officer – Sundar Pichai – said:

'Our strong results this quarter reflect the helpfulness of our products and services to people and businesses, as well as the accelerating transition to online services and the cloud.’

‘Google succeeds when we help our customers and partners succeed, and we see significant opportunities to forge meaningful partnerships as businesses increasingly look to a digital future,’ Mr Pichai finished.

In after-hours trade and at the time of writing, Alphabet was up 7.54% or $144.76, to $2,063.88 per share.

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