Google's parent company's fourth-quarter earnings report exceeded expectations across the board, up nearly 5% after hours

On Tuesday, February 1, after the U.S. stock market, digital advertising and search giant Alphabet, google parent company, released its fourth quarter financial results for fiscal 2021.

According to the earnings report, Google's fourth-quarter revenue was $75.33 billion, exceeding analysts' expectations of $71.89 billion. Google A U.S. stocks rose nearly 5% after hours.

Google Class A shares (GOOGL) closed up 1.7 percent on Tuesday, up three days in a row, recovering most of the losses since January 14, still down more than 9 percent from a record high of $3,019.33 set in November last year and down 5 percent this year.

Its stock price has outperformed the broader market over the past year, with a total return of 44 percent, well above the S&P 500's 17 percent, while Alphabet's biggest cloud rival, Amazon, fell nearly 8 percent, Microsoft rose 32 percent, and Facebook, the biggest competitor in the online advertising business, rose 20 percent over the same period. Alphabet is up 65 percent in 2021, outperforming other tech giants in FAAMNG and three times the nasdaq's gains.

Some analysts said that the stock price changes of giants such as Google, Facebook and Amazon, which announced earnings reports this week, may determine whether the entire market is rising or falling, and investors are waiting to see whether the NASDAQ, which is dominated by technology stocks, can completely break away from the technical level and pull back.

Wall Street has high hopes for Google Ads and cloud growth, but ads may be weighed down by supply challenges for marketers

According to data compiled by Bloomberg, analysts continue to raise Alphabet's target price, and the gap with its actual stock price once hit the largest since the outbreak of the epidemic in Europe and the United States in March 2020, and the average wall Street target price represents a 25% increase in the stock price.

Only one analyst currently does not recommend "buying". Alphabt has risen 8 percent since Microsoft released a better-than-expected earnings report, surpassing the Nasdaq 100, the largest two-day gain in more than a year, and becoming a favorite among investors in the large-cap after Amazon. This was largely due to the company's price-to-earnings ratio falling to 22 times its profit expectations for next year, a 16 percent discount from the NASDAQ's 100, which is seen as providing growth prospects at reasonable prices.

Investors and analysts will be keeping a close eye on the performance of the advertising and emerging cloud businesses, which are Google's main revenue drivers. Google Cloud continued to record operating losses, but the company continued to invest heavily in trying to steal market share from Amazon's AWS and Microsoft Azure cloud services.

Major investment banks such as JPMorgan Chase said apple iOS privacy changes may not have a significant impact on its advertiser base, mainly because Google's revenue-generating business modules are more diverse and it has important first-hand data through search and video platforms. Google Search may also benefit from the trend of social media advertising shifting "positions" due to changes in iOS privacy settings.

At the same time, the cloud remains a long-term growth opportunity and a significant investment area for Alphabet. Dan Ives, an analyst at investment bank Wedbush, said that Microsoft's better-than-expected earnings report shows that the demand for cloud software continues to grow, which is also a good sign for other technology giants, and Wall Street will pay special attention to the details of Google and Amazon's overall cloud computing needs in 2022.

However, The Motley Fool, a US stock research and investment website, warned that the positive earnings report does not mean that Google's stock price can continue to rise, because its advertising business may be dragged down by problems related to supply challenges. Alphabet Search and YouTube video-critical business rely on businesses' marketing spending, negative factors such as high inflation and supply chain disruptions lead to higher costs, and once advertisers withdraw marketing spend, Google's revenue will decrease.

In the fourth quarter of last year, Google announced an expansion of real estate investments and expanded the road test of the self-driving car Waymo to other major cities such as New York and San Francisco. YouTube's video platform has been integrating more e-commerce features in recent quarters to take on TikTok. Google also announced in the fourth quarter of last year that it was increasing hiring, and investors will pay special attention to its cost issues.

(Continuous update)