Alphabet Stock Surges 9.6% on Strong Earnings and Cloud Growth
Alphabet shares jump nearly 10 percent after the company reports second-quarter earnings that easily beat analyst expectations. The tech giant also shows impressive momentum in its cloud business and YouTube advertising.
Alphabet shares surge 9.6 percent, giving the company its best trading day since 2015 after it reports second-quarter earnings that easily beat Wall Street expectations. The tech giant reports earnings per share of $14.21 on revenue of $38.94 billion, easily surpassing the anticipated $11.30 per share and $38.15 billion in revenue. Additionally, the company sees its market capitalization climb by over $75 billion to reach $864.5 billion as investors react positively to the quarterly results.
A major factor driving the stock higher is the impressive growth of Google's cloud business under new leader Thomas Kurian. Revenue in the "other" category, which primarily includes cloud services, jumps to $6.18 billion, up significantly from $4.43 billion in the same period last year. CEO Sundar Pichai reveals that the cloud unit reaches an annualized revenue run rate of $8 billion and outlines plans to triple the cloud sales force in the coming years to better compete with Amazon and Microsoft.
The company also benefits from lower-than-expected traffic acquisition costs and a strong recovery in YouTube's advertising revenue. Traffic acquisition costs come in at $7.24 billion, slightly below estimates, while CFO Ruth Porat highlights that YouTube serves as the second largest driver of revenue growth for the quarter. These positive indicators, combined with a newly approved $25 billion stock repurchase program, give investors renewed confidence in the search giant's financial health.