The search giant continues to expand and absolutely crushed analyst expectations. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused on key areas such as search, advertising, operating systems and platforms, and enterprise and hardware products. The company generates revenue primarily by delivering online advertising and by selling apps and content on Google Play, as well as hardware products. Alphabet provides its products and services in more than 100 languages and in 190 countries, regions and territories.
Alphabet offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as search, ads, commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
Analysts point to Google Cloud, which is the largest cloud infrastructure play and engages in more technology, infrastructure research and development in headcount and dollars than any other company does. That gives it the strength and wherewithal to compete with and differentiate itself from Amazon’s AWS and Microsoft’s Azure.
BofA Securities noted this after the stellar results:
Clean beat; first quarter revenue and margins above Wall Street with search growth at 30% versus 22% expected, and constrained, 4% year-over-year operating expense growth. Raising 2022 EPS 15%; Still see room for more optimism on a Search recovery as travel and local rebound. Raising our price target; Top FANG stock given preference for easier search comps versus DR focused peers, cyclical exposure, and valuation.
The $2,440 BofA Securities price target was raised to $2,755, which compares with the consensus target of $2,426.55. On Wednesday, Alphabet stock rose almost 3% to close at $2,359.04 per share.
This is a more conservative way for investors to participate in the massive cloud growth, and the company also posted stellar results. Microsoft Inc. (NASDAQ: MSFT) manufactures, licenses, and supports a wide range of software products. The company has transformed its business model from a component-driven model (personal computer, server) to one driven by the need for cloud capacity.
Many Wall Street analysts agree that Microsoft has become a clear number two in the public or hyper-scale cloud infrastructure market with Azure, which is the company’s cloud computing platform offerings, and which continues growing at triple-digit levels. Some have flagged Azure as the biggest rival to Amazon’s AWS service.
Some analysts maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users. The cloud was big in the first-quarter earnings report, and it will remain a growing part of the software giant’s earnings profile.