Alphabet shares surged during Tuesday’s after-hours trading following the Google parent’s better-than-expected quarterly revenue and earnings on cloud and advertising strength. Total revenue for the three months ended Sept. 30 climbed 15%, or 16% on a constant-currency basis, to $88.27 billion, better than estimates of $86.3 billion, according to LSEG. Adjusted earnings-per-share (EPS) surged 37% year-over-year, to $2.12, exceeding Wall Street’s consensus estimate of $1.85 per share. GOOGL YTD mountain Alphabet YTD With shares running into the after-the-bell release and up around 5.7% on the print, we’re keeping our wait-for-a-pullback 2 rating . Given the volatility we are likely to see going into the U.S. presidential election, especially if the winner is not declared relatively quickly, it just doesn’t make much sense to chase these types of rallies. We’re reiterating our $210 per share price target. It’s also worth noting that cash flow in Q3 was a bit light, in part because of a $3 billion hit related to a 2017 fine levied by the European Commission. However, it’s the ongoing antitrust litigation in the U.S. by the Justice Department that represents a bigger overhang on the stock. Jim Cramer has been frustrated by the year-to-date performance of Alphabet’s stock versus Big Tech peers and fellow Club names Meta Platforms and Nvidia . However, on “Mad Money” following the release, Jim said Alphabet delivered an “unambiguously great quarter.” Bottom line Listening to the post-earnings conference call made one thing abundantly clear: Artificial intelligence is being woven into every aspect of this company and, in turn, driving more engagement from both consumers and enterprise customers alike. It’s not just revenue that AI is helping to grow, it’s also helping the company become more efficient than ever. In fact, on the call, CEO Sundar Pichai said, “Today, more than a quarter of all new code at Google is generated by AI, then reviewed and accepted by engineers. This helps our engineers do more and move faster.” Alphabet Why we own it : Alphabet’s Google Search is an invaluable tool for advertisers. Its YouTube platform continues to gain screen time with viewers and stands to grow even more as the company looks to acquire major league sports rights. Though it did get off to a bumpy start, we believe Alphabet to be a leader in artificial intelligence research and see progress aiding cloud-computing growth over time. Competitors : Amazon , Microsoft and Meta Platforms Weight in portfolio : 2.73% Most recent buy : March 4, 2022 Initiated : July 22, 2014 A quarterly strong operating margin along with management commentary increased our confidence that Alphabet has not taken its eye off the efficiency ball while balancing growth-oriented endeavors such as artificial intelligence and cost discipline. We’re not overly concerned about capital expenditures given what we’re seeing in generative AI advancements. It costs money to make money, and the…
Read More: Alphabet’s growth pillars stand tall in Q3. But we’re not ready to act
