Google Parent Alphabet Reports Mixed Earnings As Moon Shot Programs Blast Off

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Social advertising in all formats is gaining traction and will be among the key drivers of digital ad growth in the next five years.

Google, on the other hand, continues to rely nearly completely on search, which makes it the one-legged stool that creates investor anxiety.

Alphabet is trying to redirect its efforts as it tries to bring about some financial discipline in the company, which is good for Google stock.

Alphabet stated that the profit surged because of mobile search and video sharing on YouTube. Furthermore, the company said that the momentum in its play store sales and programmatic platform were instrumental in revenue growth in Q4.

Research firm eMarketer has estimated that Google will capture $60.92 billion in search ad revenue this year, or 58.8% of the search ad market worldwide. Better yet, on smaller mobile displays, Google's ads occupy a large portion of the screen - making it more likely a user will click on them. Google represented 99% of revenue, generated all of the EBITDA (53.1% margin), and consumed 85% of capex ($3.1B). As a result, the company's top line growth from search ads across network member and owned sites has failed to match the growth in search volume.

The results hinge on Google's new advertising formats, like promoted pins in Maps, and progress monetizing YouTube. The company cited lower costs-per-click on its properties and a raised tax on stock-based compensation as reasons for the miss.

The Google Phone division makes up approximately 6.8% of its estimated total value, according to our model. The Company holds interests in Google Inc. AI, which includes machine learning, has been used in services like Google Photos for a while, and in 2016 it expanded greatly with services like the Google Assistant. I'd argue that the stability of Google's revenue in the next two to three years will depend on their ability to maintain the growth of mobile revenues.

Analysts also took heart from the company's move to diversify beyond advertising, with Porat highlighting that the company was broadening its business and moving towards growth in hardware, app sales and the cloud business. Road trip? Canadian Prime Minister Justin Trudeau responded on Twitter to U.S. Alphabet spent much of the past year narrowing the number of those bets, including shelving a delivery-drone project, scaling back its Google Fiber Internet-access service, and spinning its self-driving auto technology off as a separate entity called Waymo.

"However, it's important", said Porat, "to note the cost of revenues was also affected by approximately $320 million of one-time charges related to equipment and other adjustments which were unrelated to hardware".