When Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) reported its third-quarter results yesterday after the market closed, the conglomerate’s top and bottom lines came in above analysts’ average estimates. However, GOOG stock is falling in early trading because the financial results of its cloud unit were weaker than expected.
In the wake of the report. Wall Street analysts had mixed views on GOOGL stock.
GOOG Stock and Alphabet’s Q3 Results
The firm generated revenue of $76.69 billion, slightly above analysts’ mean estimate of $75.97 billion. The company generated earnings per share of $1.65, well above the average forecast of $1.45, while its operating income climbed to $21.3 billion, up from $17.14 billion in Q3 of 2022.
The firm’s total ad revenue jumped 10% versus the same period a year earlier, enabling its total sales to increase 11% year-over-year. That broke a streak of four consecutive quarters of growth of less than 10%.
Moreover, Google Cloud’s sales soared 22% year-over-year to $8.4 billion, below analysts’ mean estimate of $8.64 billion. However, the unit generated an operating profit of $266 million versus an operating loss of $140 million in Q3 of 2022.
Mixed Reactions by Analysts
British bank Barclays reported that Alphabet’s Search and YouTube businesses generated higher-than-expected revenue, while the company’s profit margins were slightly below the mean estimate.
But most important, according to Barclays, was the 11% year-over-year increase in the firm’s Search revenue. Last quarter, the business’s sales climbed just 7% YOY.
Barclays kept an “overweight” rating on GOOG stock.
Less upbeat was investment bank Bernstein, which maintained a “market perform” rating on the shares, citing a downturn in the company’s margins and the performance of its cloud unit.
Japanese bank Mizuho kept a $155 price target and a “buy” rating on the shares, as the bank believes that Google Cloud’s growth will accelerate going forward.
And everyone wanted to know when Google would see some profit from its artificial intelligence (AI) endeavors.
As of this writing, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
