Google parent company Alphabet (GOOGL) has issued second-quarter financial results that beat Wall Street forecasts on the top and bottom lines.
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The search engine giant announced earnings per share (EPS) of $2.31, which topped estimates of $2.18. Revenue in the April through June period came in at $96.43 billion, which was ahead of the consensus expectation among analysts of $94 billion.
Alphabet also topped several other key metrics for the company. These include YouTube advertising revenue that totaled $9.79 billion versus $9.56 billion expected on Wall Street. Google Cloud revenue, which analysts scrutinize closely, came in at $13.62 billion, which was ahead of consensus estimates of $13.11 billion. And traffic acquisition costs of $14.70 billion beat forecasts of $14.18 billion.
Alphabet’s earnings per share. Source: Main Street Data
Increased Spending
Despite the strong Q2 numbers, GOOGL stock is down about 2% in after hours trading on news the company plans to increase its capital expenditures. Management said that they will increase the company’s capital expenditures this year to $85 billion, up from a previous projection of $75 billion.
Alphabet has said that it needs to ramp-up its capex as it competes aggressively in the artificial intelligence (AI) arena. The company’s search engine, while still dominant, faces growing threats from AI that’s being developed by rivals such as Microsoft (MSFT) and privately held OpenAI.
Is GOOGL Stock a Buy?
The stock of Alphabet has a consensus Strong Buy rating among 39 Wall Street analysts. That rating is based on 30 Buy and nine Hold recommendations issued in the last three months. The average GOOGL price target of $206.51 implies 7.93% upside from current levels. These ratings are likely to change after the company’s financial results.
