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Alphabet and Microsoft rise to records after Q3 2021 earnings

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Sundar Pichai (CEO Alphabet) gestures as he speaks during a discussion about artificial intelligence held at the Bruegel Europeaneconomic think tank in Brussels on Jan. 20, 2020.

Geert Vanden Wijngaert | Bloomberg | Getty Images

The shares of AlphabetAnd MicrosoftAfter both companies released third quarter results, which exceeded analysts’ expectations, Wednesday saw record levels.

The stocks helped lift the tech-heavy Nasdaq Composite higher even as the S&P 500 was little changed and the Dow Jones Industrial Average was down slightly.

Alphabet’s market cap grew by 6.7%, to close to $2 trillion. Microsoft rose by as much as 4.9% and reached $325.40. Microsoft is nearing $2.44 trillion in market capitalization. Apple’sValue of $2.47 trillion

The world’s top tech companies are still growing despite concerns about inflation, supply chain limitations, privacy issues, and Apple’s decision to limit ads. They continue to exceed growth expectations, prove their resilience, and outperform any swings in economic conditions.

Google reports a 43% rise in advertising revenues to $53.1billion, and YouTube’s ad sales rose to $7.2billion from $5billion a year ago. According to Refinitiv, earnings of $27.99 per share beat analyst expectations for profit of $23.48, with earnings of $27.99 per share.

Google could skirt a major hitApple’s iOS privacy change, which has impacted quarterly results SnapAnd Facebook. Ruth Porat (Alphabet’s chief finance officer) said that Apple’s latest features had only a modest impact on the company’s ad revenues.

“The ad market remains strong, and unlike most digital peers, Google doesn’t seem to be negatively impacted by iOS 14 or supply chain issues,” wrote Ross Sandler, an analyst at Barclays, in a note on Wednesday. “Longer-term Google remains the best positioned company in digital advertising and one of our favorite names,” wrote Sandler, who has a buy rating on the stock.

RevenueMicrosoft saw its first fiscal quarter revenue rise 22% to $45.3B from last year, and earnings of $2.27 surpassed the median estimate of $2.07 according to Refinitiv.

Amy Hood (Microsoft’s Finance Chief) stated that gross margin will rise by two percentage points in the current quarter despite the absence of any accounting changes that result in longer data center equipment useful lives. She also expects the increase to continue as Microsoft invests in cloud services.

Microsoft’s PC-related businesses are edging out the supply chain bottleneck in global markets. In Windows licensing sales to device manufacturers, the company saw a 10% revenue increase.

“Microsoft overcame the two key concerns heading into the print – the PC exposure and margins,” UBS analysts, who have a buy rating on the stock, wrote in a note after the earnings report.

While Google and Microsoft are both gaining popularity, investors have expressed concern about the company’s potential growth. In the past year, both stocks have increased by 83% and 51%.

Hood advised analysts to listen to Microsoft’s calls to monitor the market for advertising, as companies affected by limited supply may not be willing to invest. News and search advertisingMicrosoft accounts for approximately 6% in its revenue. 

Google warns that the growth rate won’t be the same as it was in recent periods. This includes 69% growth in ad revenue in the second quarter

“Given the gradual recovery and results through the back half of 2020, the benefit of lapping prior year performance diminished in Q3 vs Q2 and will diminish further in Q4,” Porat said on Tuesday’s earnings conference call.

The first half of 2022 will see a slower growth in revenue, according to analyst expectations. This is partly due to lower feesIn the Google Play Store and regulatory issues

WATCH: Alphabet is getting better at deploying apps and services to consumers, says Baird’s Sebastian

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