Google Parent Alphabet Crushes Q3 Estimates, Stock Pops 7%; YouTube Ad Revenue Passes $5B

Google Parent Alphabet had a sour quarter last time but today it crushed Wall Street estimated and saw its stock surge 7% in late trading as revenue jumped 14% to $46 billion.

Earnings per share jumped t $16.40 from $10.12.

Wall Street had anticipated revenue of $42.8 billion and EPS of $11.37.

YouTube ad revenue came in at over $5 billion (also a beat) from  $3.8 billion in the year-earlier quarter .

Brand advertising and a burgeoning connected TV story at YouTube are underappreciated, several analysts said.

Wall Street firm Jeffries thinks fundamentals at Alphabet are recovering faster than expected. “Our checks indicate strength in YouTube ad pricing, return of brand ad spend, and continued strong bookings in Google Cloud. Overall, GOOGL remains well-positioned to monetize secular shifts to online marketing, content and commerce.”

Alphabet CEO Sundar Pichai needs a lift. He was called to testify yesterday along with Facebook chief Mark Zuckerberg and Twitter’s Jack Dorsey at a Senate committee revenge hearing that was supposed to focus on Section 230 but was mostly a grilling on how social media handled a controversial New York Post story that contained unsubstantiated allegations against Joe Biden.

The owner of the world’s largest search engine is also newly the target of an anti-trust suit by the U.S. Department of Justice. But government action could take years and experts seem to believe that a break-up is unlikely. The DOJ complaint vs. Google, in the view our expert, said a Jefferies analyst, “is that its scope was narrower than expected. It’s a tough case to win. But generally didn’t’ exclude that a new administration could write laws that are less friendly to big tech.”

It would near impossible to wean people onto other search engines, Jefferies said. It ran a survey of 1,000+ consumers, and 71% would choose to reinstall Google app or go direct to google.com if Google was removed from all their devices. This speaks to the overwhelming preference for and superior quality of Google search results. There appears to be little harm to consumers, and we see limited impact to Google over time.

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