Alphabet (GOOGL) Q2 2019 earnings beat on both top and bottom lines expectations. GOOGL Management announced a $25 billion repurchase of its Capital C stock, the biggest in the Alphabet’s history. Revenue grew by 20.8% to $31.7bn beating expectations of $30.8bn. EPS grew by 10.7% to $14.7 beating expectations of $13.971. Net advertising revenue grew by 20% to $25.4bn (vs $25.2bn). Paid clicks on Google properties grew by 28%. The cost per click on Google properties fell by 11% since this time last year. Traffic acquisition costs (costs for search engine default) also came in better than expected at $7.24bn (vs $7.27 expected).
Google Other Revenues, – Google Cloud Google Play, and Hardware – grew by 40% to $6.18bn topping expectations of $5.58. Capital expenditure growth showed signs of slowing as it increased by 30% annually (vs 90% yoy growth in Q218).
Cloud computing is GOOGL’s fastest growing sector and these results put it on course to generate more than $8 billion per year. Management intends to increase the Cloud employees.
The cloud sector is proving to have the highest growth rate within the company while Youtube, continues strong. The core advertising business has come in better than expected with lower costs. I still believe Alphabet is a long term winner. I expect the revenues to continue to grow above 10% annually. GOOGL valuation remains relatively low with a 12m forward P/E of 18.5. Regulatory concerns and privacy issues are the major headache for the stock.
The technical analysis just confirms the bullish trend and an attempt to close the gap from end of April looks possible.Don’t miss a beat! Follow us on Twitter.