Alphabet Stock Skyrockets on Stellar Earnings Despite $5 Billion E.U. Fine

Alphabet

Shares Tuesday were set to open at an all-time high, up about 5% ahead of the opening bell.

The internet giant on Monday reported second-quarter profit of $3.2 billion even after accounting for the fine, imposed by the European Union earlier this month for abusing its market dominance On a per-share basis, the Mountain View, California-based company said it had net income of $4.54. The shares rose as much as 5.3 per cent, the most in nearly nine months, to US$1,275 at the market open in New York Tuesday. Their average price target is now $1,340 - up from $1,259 last week - according to data compiled by Bloomberg. Google's advertising business grew 24 percent. That had quelled analysts' expectations ahead of the results on Monday. It is appealing the ruling.

On the earnings call, Pichai suggested the company wouldn't dramatically alter its Android strategy.

"I'm confident that we can find a way to make sure Android is available at scale to users everywhere", Google's chief executive, Sundar Pichai, told investors.

But the record €4.34bn European Union fine over over Google's Android mobile operating system knocked $5bn off its profits.

On the face of it, the European Commission's massive fine hasn't really hurt Alphabet - at least not in the eyes of investors.

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Google properties revenue jumped 26 percent to $23.3 billion.

Google and Apple looking to increase their market share. You can use them to surf otherwise seedy public WiFi with more security and privacy.

Other tech giants Amazon and Facebook will report quarterly results later in the week. Google's capital spending climbed to $5.3 billion, up 87 percent from the same period in 2017. Some analysts excluded other items as well, and Alphabet also beat that consensus of $9.59. Key to this, the firm saw its traffic acquisition costs fall for the first time in three years. This quarter, ads represented just 84 percent of Google's overall revenues.

Daniel Ives of GBH Insights said in a research note that despite some regulatory concerns, "advertising and "bread and butter" search revenues were healthy and a good barometer of potential strength heading into the rest of 2018/2019".

The reason for the surge was better than expected profits in Google's ad business, which continues to dominate. That leaves the infamously opaque "other revenues" segment - including the hardware business, Play Store, etc. - to bring in $4.4 billion in revenue.

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