[Overseas Stocks Spotlight] "Alphabet, High Growth in YouTube Ads and Cloud Business"

[Asia Economy Reporter Eunmo Koo] There is an analysis that Alphabet (Alphabet·GOOGL.US), the holding company of Google, still possesses growth drivers due to the high growth of YouTube and cloud services and its advantage in future industries.

Alphabet's revenue for the third quarter of this year was $46.2 billion (Google revenue $46 billion), a 14% increase compared to the same period last year. Operating profit rose 22% to $11.2 billion, and diluted earnings per share (EPS) recorded $16.4 (consensus $11.4). Revenue excluding TAC (Traffic Acquisition Cost) was $38 billion, exceeding market expectations ($35.3 billion). Advertising revenue from Google Search and others was $26.3 billion, YouTube advertising revenue was $5 billion, and cloud revenue was $3.4 billion.

Advertising revenue rebounded across all regions, with Google ads and YouTube ads increasing by 10% and 32% year-over-year, respectively. Google Cloud revenue rose 45% year-over-year, driven by strong demand for Google Cloud Platform (GCP) and Workspace from enterprises. Operating profit exceeded the consensus of $8.4 billion due to improved profitability from delayed hiring and reduced marketing expenses.

The high growth of YouTube and cloud, along with advantages in future industries, indicate that growth potential remains ample. Seunghoon Lee, a researcher at IBK Investment & Securities, stated in a report on the 8th, “Although investment sentiment was dampened as quarterly revenue declined year-over-year for the first time since establishment due to antitrust regulations and COVID-19 issues, third-quarter revenue rose 14% year-over-year, and with digital transformation accelerating due to COVID-19, mid- to long-term momentum is expected from increased cloud revenue.”

He added, “While growth in the search advertising sector remains solid, cloud and YouTube advertising maintain high growth rates, and Alphabet leads the global market in future industry technologies such as artificial intelligence (AI) and autonomous driving, so growth potential is sufficient. Although antitrust issues negatively affect investment sentiment, the possibility of corporate breakup is considered low, and rather, it will be an opportunity for the value of each business to be re-evaluated.”

Alphabet is a U.S. holding company with subsidiaries including Google, Google Fiber, Deepmind, Waymo, and X. Its main revenue comes from Google’s search, YouTube advertising, and cloud businesses.

This content was produced with the assistance of AI translation services.