Why Alphabet stock popped on earnings

Consumers are active, advertisers are spending, and Google is reaping the profit.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are rising today, up by 3.1% as of 1:30 p.m. EDT, after the internet search giant reported Q2 2021 results last night. Alphabet crushed earnings estimates. Instead of the $19.21 per share in profit on $56 billion in revenue that Wall Street had forecast, Alphabet earned $27.26 per share on sales of $61.9 billion.

So what

"In Q2, there was a rising tide of online activity in many parts of the world," commented CEO Sundar Pichai, allowing Alphabet to cash in on "elevated consumer online activity and broad-based strength in advertiser spend." Sales climbed 61.6% year over year in the quarter, operating profit margin on those sales nearly doubled to 31%, and Alphabet's earnings of $27.26 per share grew 169% over last year's bottom-line haul. Literally every Alphabet division gained strength in Q2, with Google Cloud (sales up 53%), Search (up 68%), and YouTube ads (up 84%) being particular standouts. (Notably, however, Google Cloud remains a money-losing business for Alphabet, with operating losses of $591 million.)

Now what

Wall Street was just about unanimous in its approval of Alphabet's quarter. At last count, TheFly.com had recorded no fewer than 17 separate analysts raising their price targets on the stock, with Susquehanna going as high as high as $3,600 a share. If they're right about that, then even after today's gains, Alphabet stock still has another 32% profit left in it for new investors.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Rich Smith has no position in any of the stocks mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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