Google’s parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) reported its third-quarter earnings after the bell on Tuesday. The company did better than expected, posting beats on both revenue and earnings. After posting a 4.8% gain on Wednesday, GOOG stock now is up over 69% so far in 2021 and 93% over the past 12 months.
With the stock at an all-time high close, is now the time to make a move?
At this point it’s tough to miss if you buy GOOG shares. The company continues to dominate in online ad revenue — and advertisers have been stepping up their spending. Privacy changes to iOS on the iPhone that wreaked havoc on social media ad revenue have not had a material impact on Google.
Google Cloud is paying off, and services like Google Workspace continue to grow in popularity. This time around, I want to have a quick look at what happened in the company’s latest quarter and then touch on several Google products that are making a splash this year.
Here’s what to expect from GOOG stock moving forward.
Alphabet Crushed It Again in Q3
There’s a reason why the impressive 2021 rally in GOOG stock reached its heights in the weeks after the company reported its Q2 earnings. Alphabet crushed it. In the third quarter, Alphabet did it again. Now, the rally is back on.
Revenue for the quarter was $65.12 billion, topping market expectations for $63.34 billion. That’s a 41% year-over-year increase. Adjusted earnings-per-share hit $27.99, compared to the expected $23.48 per share. Those numbers also significantly improve upon the $16.40 per share reported in the same quarter last year.
Of particular interest (given the money Alphabet has been throwing at it) was the increase in Google Cloud revenue. It hit $4.99 billion for a 45% YoY gain. Meanwhile, the division’s operating loss was virtually halved to $644 million.
Pixel 6 Smartphones
But not everything has been hot for Google. Let’s have a look at a Google business that showed promise, then fell flat.
Google’s Android operating system absolutely dominates the smartphone market, but the company’s own Pixel smartphones are a niche player. Despite being a showcase for Google’s cloud-based tech for features like high-performance cameras, the Google Pixel has failed to catch on with consumers.
Last year’s Pixel 5 was a low point. The company positioned the Pixel 5 as its “value” flagship and it suffered in comparison against true flagships like the iPhone 12 Pro. In September, Google’s share of the North American smartphone market dropped below 2%.
The new Pixel 6 series, which was revealed several weeks ago, is a return to being a true flagship smartphone. The Pixel 6 Pro includes a new custom-designed Google processor, a move to multiple cameras, a big 6.7-inch OLED display and a premium design. It has been very well received so far.
The Pixel 6 is never going to move the company’s market share bar by a lot, but that’s not the point. Increased visibility will improve its impact as a showcase for Android and Google mobile services versus the iPhone. And that’s critical for maintaining and growing Alphabet’s ad revenue.
Google TV
Speaking of providing a platform for consuming ad revenue-generating Google services, Google TV is also making big moves in 2021.
In 2021, Google retired its Android TV. The company replaced the underperforming smart TV platform with the much more modern and user-friendly Google TV.
A number of leading smart TV makers are including Google TV on their new sets, but there was big news in January. TCL — the Chinese TV maker that has seen massive growth in the U.S. market — announced it would be adopting Google TV for its smart TV’s.
This is a big win for Google and Alphabet. With TCL joining other brands, Google TV is going to be available on the majority of TVs sold in the U.S. this year. That’s more eyeballs on Google ad revenue-generating services.
Bottom Line on GOOG Stock
GOOG stock currently earns an A-rating in Portfolio Grader. Checking with the Wall Street Journal, of the 47 investment analysts polled, there are only two dissenters who recommend either holding or selling the stock. It is very much a consensus “buy.” Their average price target of $3,295.45 offers a nice 7.8% upside.
Alphabet is currently firing on all cylinders. The company’s Q3 earnings are the latest evidence of this. Even products that are minor in the grand scheme of things — like Pixel smartphones and Google TV — are picking up steam. An investment in GOOG stock is a strong contender to continue delivering long-term growth.
— Louis Navellier and the InvestorPlace Research Staff
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Source: Investor Place