Reports Q1 2021 results on Tuesday, April 27, after the close
Revenue Expectation: $ 51.38 billion
EPS Forecast: $ 15.70
Despite multiple regulatory investigations and tightening regulations on how social media companies collect and use personal information, investors are continuing their love affair with Google parent Alphabet (NASDAQ :). The stock has been the top-performing name among the peer group of megacap tech giants this year.
GOOGL Weekly TTM
Google shares, which are up more than 30% in 2021 and closed at a record high of $ 2,299.93 Friday, are benefiting from clear signs that Search Engine Beemoth finally manages to diversify and expand sales of its YouTube and cloud computing business.
This turnaround is promising, especially at a time when the economy is opening up again, increasing the prospects for a strong revival of digital advertising – the core business of the company – from industries such as travel, restaurants and tourism-related services .
Because of this resilience, analysts expect the company's earnings per share to increase by about 60% to $ 15.70 when Google announces its first quarter earnings tomorrow. Sales over the period are likely to rise 25% to $ 51.38 billion from a year ago.
In a recent note, Bank of America named Google as one of the top reopening stocks, predicting an even higher second-quarter revenue acceleration, even "as the revenues of many major Internet companies are slowing."
Diversification Accelerates
As recovery in the digital advertising market accelerates, it is also encouraging for investors to see the company's efforts to diversify sales beyond the search engine activities are bearing fruit. Google Cloud brought in $ 13.06 billion in revenue in 2020.
Jefferies analysts said in a recent note that the search giant's cloud operations saw a stronger acceleration than Amazon's cloud unit (NASDAQ :), Amazon Web Services, while JPMorgan valued the cloud operations in an April report. at $ 246 billion.
Also YouTube, another fast-growing company, saw its sales increase by 46% in the last quarter of 2020, as advertisers flocked to the video sharing platform amid the pandemic. The company said the platform now reaches more users between the ages of 25 and 49 than all cable networks combined.
Morgan Stanley analyst Brian Nowak believes YouTube is "the most underrated advertising platform" in the Internet industry. With a strong recovery in the branded and direct response ad market, YouTube is well positioned to achieve revenue growth of more than 40% by 2021, he wrote in a recent note.
These optimistic analysts have so far imposed the many antitrust probes on Google. Many states, as well as the United States Department of Justice, filed multiple antitrust cases against the company last year, accusing Google of illegally monopolizing Internet searches and search ads through a series of anti-competitive contracts and behaviors.
For For now, investors are ignoring these legal challenges, which may take years to complete.
Bottom Line
With its core advertising business unchallenged and revenue diversification increasing, Google is likely to see strong revenue this year. Stocks are likely to be more upward in the coming days.
