‘Cloud killin’ it’: Wall Street is raving about Alphabet’s monster quarter. Here’s what top analysts are saying.

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Getty Images / Adam Berry

  • Shares of Google parent Alphabet spiked as much as 12% on Friday after reporting better-than-expected second quarter earnings and announcing plans to repurchase $25 billion worth of stock.
  • The tech conglomerate posted revenue excluding traffic-acquisition costs of $31.7 billion, beating analyst forecasts of $30.84 billion.
  • The company also disclosed that its growing cloud business now has an $8 billion annual revenue run rate, compared to the $7 billion estimated by analysts at RBC Capital Markets.
  • Here’s what Wall Street analysts are saying about the tech giant’s impressive earnings report.
  • Watch Alphabet trade live.

Alphabet’s stock soared as much as 12% Friday after the tech-conglomerate reported second quarter financial results that beat Wall Street expectations.

Here are the key numbers:

  • Revenue (excluding traffic-acquisition costs): $31.7 billion, versus the $30.84 billion that analysts expected
  • Earnings per share: $14.21, compared with $11.19 expected by analysts
  • Google advertising revenue: $32.6 billion, compared with $28.1 billion last year
  • Cloud annual revenue run rate: $8 billion

The company also announced a $25 billion stock repurchase plan.

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Overall revenue increased by 19% from the same period last year, and the growth was in part due to improvements in the company’s cloud business, Ruth Porat, Alphabet’s senior vice president and chief financial officer said on an earnings call.

“Once again, Cloud was the largest driver within other revenues, and the third largest driver of revenue growth for Alphabet overall,” he added. “GCP (Google Cloud Platform) remains one of the fastest growing businesses in Alphabet.”

The company’s cloud business includes the Google Cloud Platform, which offers a suite of products such as machine learning and data analytics services, and the Google Suite, which features productivity applications like gmail and Google Drive.

Alphabet’s strong earnings follow the announcement of a new antitrust investigation by the US Department of Justice in “market-leading” internet platforms. Amazon, Facebook, Google, and Apple lost a combined $33 billion in market value on the news.

Here’s what Wall Street analysts are saying about Alphabet’s impressive second quarter numbers:


Goldman Sachs: ‘We continue to view Alphabet as one of the best-positioned digital ad companies.’

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Google CEO Sundar Pichai.
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Justin Sullivan/Getty Images

Price target: $1,350

Rating: Buy

“We continue to view Alphabet as one of the best-positioned digital ad companies, and see non-advertising revenue streams like Google Cloud becoming a more central part of the thesis over time,” a team of analyst led by Heather Bellini said in a research note to clients on Friday.


UBS: ‘We see continued momentum in Google Cloud.’

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Google Cloud CEO Thomas Kurian at Google Cloud Next 2019.
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Google

Price Target: Increased to $1,425, from $1,420

Rating: Buy

“Looking out long term (especially when risk/reward is measured against YTD underperformance), we reiterate our Buy rating and see all long-term drivers solidly intact (AI/machine learning, local advertising, media consumption, cloud computing, hardware & Other Bets),” the analyst Eric Sheridan said in a note to clients on Friday.

He continued: “We see continued momentum in Google Cloud, product innovation (both consumer & advertiser) and another hardware cycle as all supportive of strong growth ahead.”


RBC: ‘Cloud killin’ it’

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Alphabet CEO Larry Page.
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Reuters

Price target: Increased to $1,425, from $1,300

Rating: Outperform

“We believe the company’s investments in Ads innovation, Cloud, Hardware, Internet-connected Homes & Autonomous Vehicles help set the company up for more years of premium growth & profits,” Mark Mahaney, an analyst, said in a research note to clients on Friday.

Mahaney minced no words when praising Alphabet, even going as far as to title a section of his report “Cloud Killin’ It.”


Bank of America: ‘We continue to be optimistic on medium-term benefit from machine learning.’

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Matt Rosoff/Business Insider

Price target: Increased to $1,450, from $1,350

Rating: Buy

“Call commentary suggests Google is confident about the ongoing opportunity set and momentum in revenue growth aided by artificial intelligence / machine learning (AI/ML) innovation,” a team of analysts led by Justin Post said in a note to clients on Friday.

The team added: “We continue to be optimistic on medium-term benefit from machine learning on usage and ad targeting, revenue potential driven by new opportunities(Google cloud and Waymo), and relatively undemanding core Google valuation.”


Guggenheim: ‘We consider Alphabet a collection of attractive businesses.’

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YouTube Chief Product Officer Neal Mohan at VIDCON 2019.
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Tom Vickers/MOVI Inc

Price target: Increased to $1,425, from $1,400

Rating: Buy

“We continue to believe Alphabet has the best mix of human, technological, and financial capital, regardless of quarterly volatility,” Michael Morris, an analyst, said in a note to clients on Friday.

He added: “Though we see a breakup of the business as unlikely, we consider Alphabet a collection of attractive businesses (search, YouTube, advertising infrastructure, cloud) that would likely thrive if operated separately.”