Alphabet Pops 4% After A Blowout Quarter, Google Cloud & Ad Revenues Outperform

Shares of Alphabet Inc. (GOOGL) soared 4.2% in Tuesday’s extended trading session after the parent company of Google posted better-than-expected 1Q results. A surge in online customer activity, elevated advertising revenue, and continued momentum in Google Cloud were the primary drivers.

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Alphabet’s reported 1Q earnings of $26.29 per share more than doubled on a year-over-year basis and handily beat the Street estimates of $15.88 per share. Revenue surged 34% to $55.3 billion and topped analysts’ expectations of $51.7 billion.

Google advertising revenue jumped 32.2% year-over-year to $44.7 billion in the quarter. Additionally, Google Cloud reported 43% growth and stood at $4 billion. (See Alphabet stock analysis on TipRanks)

Google and Alphabet CEO Sundar Pichai said, “Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We’ve continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations.”

Recently, Alphabet’s board of directors has authorized the company to buy back up to an additional $50 billion worth of its Class C stock.

Following the 1Q results, Stifel Nicolaus analyst Scott Devitt increased the stock’s price target to $2,700 from $2,350 and reiterated a Buy rating.

Devitt said, “We see positive read-throughs for omniretailers, SMB-enablers, digital goods providers, travel companies… it appears many pockets of the digital economy are full steam ahead. Consumer behavior in Alphabet’s markets appears commercially charged, though durability of current trends remains uncertain (a question facing corporates and investors alike). Alphabet is capturing incremental online share shift within this environment of elevated activity and taking its fair share.”

Alphabet shares have exploded 86% over the past year, while the stock still scores a Strong Buy consensus rating based on 31 unanimous Buys. That’s alongside an average analyst price target of $2,515.93, which implies 9.8% upside potential to current levels.

Furthermore, TipRanks data shows that financial blogger opinions are 97% Bullish on GOOGL, compared to a sector average of 66%.