Google’s advertising business continues to grow strongly – but not quite as quickly as Wall Street expected. In the last quarter, advertising revenue rose by eleven percent year-on-year to 65.5 billion dollars (60.4 billion euros), as the parent company Alphabet announced on Tuesday. Analysts on average had expected more than $65.8 billion. The share temporarily fell by around four percent in after-hours trading.
Advertising around the Google search engine is still by far the group’s most important source of money. Sales here rose from $42.6 to $48 billion in the last quarter. The video subsidiary increased advertising revenue from almost $8 to $9.2 billion.
The development of Google’s advertising business is being watched very closely. A central question is whether attempts by competitors to use artificial intelligence to display direct answers instead of links will leave a trace on Google.
The cloud business grew from $7.3 billion to $9.2 billion. The division, which had posted an operating loss of $186 million in the same quarter last year, was now in the black of $864 million. In the so-called “other bets” – future projects such as self-driving cars or delivery drones – sales of all companies rose from 226 to 657 million dollars. The division’s operating loss has been significantly reduced: from $1.24 billion a year ago to $863 million now.
Foto: Picturellarious/stock.adobe.com
Ahead of the figures, the Canadian bank RBC has already left the rating for Alphabet shares at “Outperform” with a price target of $155. Advertising trends remain quite strong, wrote analyst Brad Erickson in a study.
Jefferies has also been bullish recently. Analyst Brent Thill raised the price target for the stock to $170. The expert continues to see strong ad growth and notable strength in the search engine segment.
Alphabet (A) (WKN: A14Y6F)
In recent months, Alphabet shares have been driven by euphoria surrounding the increasing adoption of AI. Expectations leading up to the numbers were extremely high. Stronger pullbacks offer buying opportunities!
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