Alphabet Reports Rising Profits at Core Google Businesses

Alphabet, the parent company above Google, published fourth quarter financial results after the bell on Monday.

Apple and Google traded places as most valuable company quite a bit between 2008 and 2010, before Apple jumped in value between 2010 and 2012, going from being worth $180 billion to being worth a whopping $650 billion.

Analysts are expecting Alphabet to report overall revenue growth of almost 15% in the quarter and a 20% increase in earnings per share. While they are mainly costs that rely on the Google search-ad operations, they have the potential for long-term growth, according to Ivan Feinseth, chief investment officer of Tigress Financial Partners LLC, who has a buy rating on the stock.

As the first-ever Alphabet earnings call, Google is breaking out the non-Google parts into a segment called “other bets”.

Alphabet’s Other Bets consist of other projects such as Google Fiber, Nest, Calico, GV (Google Ventures), Google Capital, X (Google X) and a few other important initiatives. He noted that just last week, the company announced that its researchers had developed an AI system that was the first in history to beat human experts at the game of Go. Other Bets generated just $448 million during the same period and posted a loss of $3.6 billion.

Alphabet’s value stood at $530bn at the close of normal trading on Monday – with Apple’s market capitalisation at nearly $535bn but its value was 1% lower after-hours. At that level, Alphabet is poised to open at an all-time high on Tuesday, swiftly overtaking Apple’s market cap.

Net profits rose to $4.9bn in the fourth quarter compared to $4.7bn 12 months earlier, with Ruth Porat, CFO of Alphabet, claiming this was based on the back of its mobile and YouTube business.

Google is forecast to capture $45.58 billion in search ad revenue in 2016, or 55.6% of the search ad market worldwide, according to eMarketer.

The results were much better-than-expected, with the conglomerate reporting a surge in revenue on robust sales of advertising on YouTube and mobile devices. Google itself saw $21.2 billion in quarterly revenue (an 18% YoY increase) and $74.5 billion for FY 2015. That trend continued, with cost-per-click down 16 percent in the previous year, but the number of paid clicks rising 31 percent.