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.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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