Alphabet Revenue Jumps 34%, Microsoft Reports Strong Growth

Alphabet Revenue Jumps 34%, Microsoft Reports Strong Growth

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Key Takeaways

• Google’s Alphabet shatters sales growth for the first quarter, shares jump 4%
• Microsoft stock dips 3%, despite beating analyst earnings expectations

Big tech earnings reports are at their highest this week with the most favored highflying growth stocks delivering their financial results for the first quarter of the year. Yesterday, minutes after the closing bell, Google-parent Alphabet and Microsoft reported far stronger-than-expected earnings results.

Alphabet, the company behind Google, blew past sales expectations for the first quarter, boosted by a strong digital ad spending both on the search engine and on Google’s video platform, YouTube. Alphabet reported first-quarter sales of $55.31bn, an increase of 34% from a year earlier when the world was at the onset of the pandemic and the coronavirus derailed the global economy. Compared with the year-ago quarter, the nearly $18bn in profits marked an increase of 162%.

Earnings per share exceeded analysts’ expectations and arrived at $26.29 per share vs. $15.82 per share expected. The tech giant posted $31.88bn in sales from its main products, including search, Gmail, and maps. YouTube accounted for $6bn, or a 49% rise from a year ago. Google Cloud revenue increased 46% year on year to $4bn. Additionally, the company announced it will be repurchasing shares worth a total of $50bn to deplete its cash reserves.

Big Tech Earnings Reports in Full Swing

Alphabet stock advanced $99, or 4.3%, in after-hours trading to reach an all-time high of $2,389.80 a share. For the first quarter, the company grew nearly 20%, while year-to-date, it is higher by over 38%.

The other tech giant reporting yesterday was Microsoft. The software company reported revenue of $41.7bn, an increase of 19% from the year-ago quarter. Earnings arrived better than expected at $1.95 a share, vs. $1.78 a share expected by analysts. The increase in revenue is the best quarterly increase for the company since 2018. Microsoft generated a net income of $15.5bn, beating Wall Street expectations.

“Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating,” said Satya Nadella, Microsoft CEO, in a statement. Microsoft witnessed strong growth during the lockdown period when consumers were stuck at home and businesses had to work remotely. As a result, the company’s valuation is hovering right under the $2tn mark, second only to Apple Inc.

Nonetheless, Microsoft shares declined roughly 3% in after-hours trading. The stock marked an increase of 8% for the January through March period and around 20% on a year-to-date basis.

Meanwhile, the coffee giant Starbucks Corp. said yesterday that global same-store sales in the first quarter increased 15% from the same quarter last year. The company said in its first-quarter report it expects profit to increase this year as the world comes out of lockdowns and restrictions.

Big tech earnings continue to roll in with technology favorites Apple and Facebook reporting their financial results for the quarter ended March. Both tech giants report on Wednesday, after the closing bell. Boeing, Ford, Qualcomm, eBay, and MGM Resorts are also set to reveal their corporate earnings today.