Google “Should Be Resilient”, Search Advertising Still Robust

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Alphabet (GOOGL, GOOG) is expected to release its third quarter results after market close on Tuesday, with Wall Street optimistic the tech giant has seen a resurgence in its research activity as travel activity ramps up.

Here are the key metrics expected in Alphabet’s report, based on consensus data compiled by Bloomberg:

  • Turnover, excluding TAC [minus traffic acquisition costs]: $ 52.32 billion vs. $ 38.01 billion year-on-year

  • GAAP earnings per share: $ 23.50 versus $ 16.40 over one year

Alphabet has so far been the top performer this year among Big Tech’s “FAANG” (Facebook, Apple, Amazon, Netflix and Alphabet’s Google) names, with shares growing nearly 57% for the year to date. day until the close of Monday. Unlike many other tech names, Alphabet has been seen as a key beneficiary of the reopening of the business, as it stands to gain from a resumption of travel-related research and advertising on Google Search.

“We believe GOOGL continues to face a high bar of expectations this quarter, but we believe the risk / reward balance continues to be positive,” BMO Capital Markets analyst Doug Anmuth wrote in a note. . “It is certain that the entire online advertising ecosystem is facing increasingly difficult comparisons to 1H22 as e-commerce activity normalizes somewhat. Moreover, after such consistent outperformance from GOOGL over 18 months, we think investors are starting to look for another step in history. “

“That said, we believe GOOGL should be resilient through YouTube’s leadership in CTV. [connected TV] and the continued emergence of the Cloud, ”he added.

Research remained by far the biggest contributor to Alphabet’s overall revenue growth, growing 68% to $ 35.85 billion. second quarter revenue, before traffic acquisition costs.

Other parts of the business also grew even faster and provided areas of opportunity for Alphabet to continue to grow. YouTube ad sales rose 84% to $ 7 billion in revenue in the second quarter. Google Cloud, a competitor to historical cloud computing leaders like Microsoft Azure and Amazon Web Services, increased sales 54% to $ 4.63 billion in the last quarter.

SEATTLE, UNITED STATES – 4/20/27: The Google logo seen at the entrance to the Google Cloud campus in Seattle. Google, a division of Alphabet, announced its quarterly results on April 27, 2021. (Photo by Toby Scott / SOPA Images / LightRocket via Getty Images)

Last week, however, Alphabet shares sold off, following a large drop in shares of advertising-focused tech companies after Snap (SNAP) released guidance for the current quarter that was well below expectations. consensus estimates.

In its statement, Snap cited changes to Apple’s iOS operating system, which allows users to adjust the way apps track their data, as a major hurdle for its advertiser base as the changes have had an impact on how advertisers can track the strength of their ad campaigns. Snap executives also cited current global supply chain challenges as another factor impacting its results, which has reduced “the short-term appetite to generate additional customer demand through the publicity “in view of an already disproportionate demand.

While Alphabet’s advertising business may also be subject to these sourcing-related issues, it likely won’t see such a noticeable impact from Apple’s iOS privacy changes on its advertiser base, have said a number of analysts.

“GOOGL has important first-party data on its various properties, including strong user intent in search and to a lesser extent on YouTube,” JPMorgan analyst Doug Anmuth said in a note. “Shortages, of course, could be a factor in the fourth quarter given GOOGL’s strong exposure to e-commerce and retail.”

This article will be updated with Alphabet’s third quarter results after market close on Tuesday. Check back for updates.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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