Alphabet Stock Outperformed The Street Expectations In Q2

Alphabet (Google)’s stock (NASDAQ
NDAQ
: GOOG) has gained around 49% YTD as compared to the 20% rise in the S&P500 index over the same period. That said, at its current price of $130, the stock is trading 4% below its fair value of $135 – Trefis’ estimate for Google’s valuation. The technology giant surpassed the consensus estimates in the second quarter of 2023, with revenues increasing 7% y-o-y to $74.6 billion. It was mainly due to a 5% growth in Google
GOOG
search, a 28% jump in the Google Cloud segment, and a 24% improvement in the Google other segment. On the cost front, total expenses as a % of revenues decreased in the quarter, leading to an operating margin of 29%. Overall, the net income increased 15% y-o-y to $18.34 billion.

The company’s top line grew 5% y-o-y to $144.4 billion in the first half of FY 2023. It was primarily driven by higher Google advertising, Cloud, and other revenues. Notably, the revenue growth was slow in 2023 due to lower digital advertisement spending by businesses because of tough macroeconomic conditions. That said, operating expenses as a % of revenues witnessed an unfavorable increase from 71.3% to 72.8%. It resulted in a net income of $33.4 billion – up 3% y-o-y.