Main US stock indexes gained on Thursday on blockbuster GDP numbers and ahead of tech giant earnings results.
Google parent Alphabet Inc returned to sales growth in the third quarter as businesses initially hobbled by the coronavirus pandemic resumed advertising with the internet’s biggest supplier of ads, the tech giant said on Thursday.
Alphabet shares rose 7.3 percent after ending regular trading at $1,556.88 per share.
Wall Street had expected a rebound from Alphabet because the company said in July that advertiser spending was inching back following a March plummet due to lockdowns. Google competitors Snap and Microsoft also reported third-quarter revenue ahead of expectations in recent days.
Google’s namesake search engine and YouTube video service are gateways to the internet for billions of people and have become more essential as people transact and entertain online to avoid the coronavirus. Advertisers have turned to Google’s ad system to let shoppers know about deals and adjusted service offerings as the economy chugs along again.
In recent months, Google has stopped charging merchants for some promotional space and issued grants to help other businesses buy ads. The efforts followed Google’s first sales decline, compared with a year-earlier period in the second quarter, since the company went public in 2004.
But the dominance of Google services has become a liability for the company, too. The US government last week sued the company for allegedly abusing a search monopoly and stifling competition. Other regulators in the US and elsewhere have similar ongoing investigations.
The various cases could lead to Google having to divest some of its ad business in the coming years, though financial analysts doubt it will happen.
Google’s ad business accounted for 80 percent of Alphabet’s $46.2bn in revenue in the third quarter. Analysts had expected $42.9bn in revenue, or 5.9 percent growth from a year ago.
Alphabet’s profit was $11.2bn, or $16.40 per share, compared with the average estimate of $7.698bn, or $11.18 per share, among analysts tracked by Refinitiv.
Google competitors Facebook Inc, Amazon.com Inc and Twitter Inc also released financial results on Thursday that were above expectations, showing how internet companies have fared well through the pandemic. Facebook shares on Thursday were up 30 percent this year, Amazon 71 percent and Twitter 51 percent.
Alphabet’s total costs and expenses rose 12 percent from a year ago to $35bn in the third quarter, compared with a 7 percent jump a quarter ago.
Capital expenditures dropped 20 percent to $5.4bn, compared with a 12 percent drop last quarter.