Alphabet shares jump like advertising, and cloud sales rise amid pandemic

Google’s parent, Alphabet Inc, reported record earnings for the second consecutive quarter on Tuesday, despite the pandemic, which boosted shares by 6%.

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The cuts by travel and entertainment advertisers in 2020 were nearly complicated over the course of the year by new releases from retail customers and others powered by COVID-19 connections online.

Google’s advertising business, including YouTube, accounted for 81% of Alphabet’s sales of $ 56.9 billion in the fourth quarter, up 23% year-over-year.

Google’s Cloud unit also benefited from the pandemic. Google Cloud’s sales were $ 3.83 billion, or $ 13.1 billion for the full year, 46% higher than in 2019.

Analysts tracked by Refinitiv have an estimated quarterly revenue of $ 53.1 billion and cloud sales of $ 3.82 billion.

In a new announcement, Alphabet said that Google Cloud has an operating loss of $ 1.24 billion in the fourth quarter and $ 5.6 billion for 2020, a 21% larger loss than in 2019.

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Google, which earns more revenue from Internet advertising than any company worldwide, has long questioned whether it can turn the cash from its advertising business into a new for-profit business. The new financial details suggest that the goal may still be years.

Alphabet’s quarterly earnings increased by 43% to $ 15.2 billion, or $ 22.30 per share, compared to the average estimate of $ 10.895 billion, or $ 15.95 per share.

The company said operating results are expected to boost by $ 2.1 billion in 2021, after a new review extended its service life and network equipment by a year or more.

Shares of Alphabet rose 6% to $ 2,035.95 on Tuesday. The share has risen 9.5% so far this year.

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Alphabet will increase its cash capacity by $ 17 billion in 2020 to $ 137 billion, but investors continue to examine the growing expenses.

Alphabet’s cost of licensing programs for YouTube, data center management, and consumer products has risen over the past year. The other cost of revenue now stands at about 27 cents for every $ 1 in sales, up from 23 cents four years ago.

The cost of acquiring traffic, which includes agreements with Apple Inc. and other companies to distribute Google services, is growing more slowly than the other costs and accounts for about 18% of sales.

Last year, the company delayed rental and capital expenses.

Alphabet’s revenue, which has increased consistently by around 20% annually for years, increased by just 12.8% in 2020. This was the slowest growth since 8.5% during the Great Recession in 2009.

The company remains undervalued compared to some competitors. Microsoft Corp shares, which entered Tuesday, traded expected revenue ten times over the next 12 months and Facebook Inc seven times, while Alphabet’s shares were about six times.

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Google’s lead in the global Internet advertising market is shrinking as Amazon.com Inc. becomes a bigger threat and China-focused providers like Alibaba are enjoying a faster backlash from the pandemic. Last week, research firm eMarketer estimated that Google would capture 30% of the market by 2021, while sales would increase by 18% to $ 117 billion.

Google is fighting antitrust investigations or charges in Australia, Asia, Europe and North America.

Google has also threatened to pull its search engine out of Australia if the country applies new rules requiring the company to negotiate fair payments to news publishers to include their content in the results.

Analysts have also expressed concern about possible changes to content moderation laws under new US President Joe Biden. These laws currently benefit companies like Google.

Alphabet also monitors a budding union effort and is continually criticized for its underachievement in the appointment and retention of women and racial minorities.