The company posted revenue of more than $55 billion for the first quarter, up 34% from one year ago, when the pandemic sent the ads business diving. Chief Financial Officer Ruth Porat cited “elevated consumer activity online and broad based growth in advertiser revenue.” Shares are up 5% in premarket trading.
Google’s advertising revenue rose 32% compared to the same period in 2020 as companies prepared for a burst of post-pandemic economic activity. YouTube ads generated $6 billion in revenue, a 49% increase.
“Covid means phenomenal sums of money have shifted to online shopping, so Alphabet’s impenetrable family of digital advertising businesses have seen revenue skyrocket,” said Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown.
Big picture: Google’s power within the internet ecosystem is under the microscope from regulators around the world. Results like this may only increase scrutiny, especially since it’s part of a long-term trend.
“An increased reliance on digital rather than physical activity is not something that’s going to dissipate,” Lund-Yates said. “Regulators are watching Alphabet like a hawk, and it’s a matter of when, not if, they swoop again.”
Companies like Google also have to contend with fierce debates about internet privacy and tracking users. This week, Apple rolled out a major privacy feature designed to increase control over personal data. It’s expected to usher in a wave of privacy awareness, especially as permission requests start coming in from apps people never thought were tracking them.
On the radar: Amazon is increasingly flexing its muscle when it comes to online ads.
The company’s US ad revenues last year grew to nearly $16 billion, increasing its market share from less than 8% in 2019 to more than 10% in 2020, according to eMarketer. The research firm thinks the business will pass the $20 billion mark this year — gains that could come at Google’s expense.
Investors watch for ‘subtle’ optimism from the Fed
Wall Street is ready to parse every word from the Federal Reserve and Chair Jerome Powell on Wednesday as investors monitor the strength of the economic recovery and concerns about rising inflation.
But after a tumultuous year, they’re not expecting fireworks.
“Today should largely serve as a status check of the economic recovery,” Deutsche Bank’s Jim Reid told clients. “Powell will likely continue his subtle shift in tone in a more optimistic direction.”
Investors remain laser-focused on when the Fed could pull back unprecedented levels of economic support and start tapering its massive bond purchases — though no changes are expected for now.
“Given the remaining gaps in the labor market and the Fed’s focus on seeing actual rather than forecasted progress, April is too soon for the return of taper talk, and those discussions will heat up during the summer instead,” Reid said.
Remember: When it comes to reading the central bank tea leaves, every word matters.
“We will look to see if Powell reiterates that it will be ‘some time’ before achieving ‘substantial further progress’ or changes the description of the path,” said Michelle Meyer, head of US economics at Bank of America. “We believe ‘some time’ is still appropriate, but there is a risk that he shifts.”
Attention will then move to President Joe Biden’s first address to a joint session of Congress, where he’s set to unveil an additional $1.8 trillion federal investment in education, child care and paid family leave.
The massive package — which Biden is calling the American Families Plan — is the second half of his effort to stimulate the economy and make it more equitable. The proposal would also extend or make permanent enhancements to several key tax credits in the Democrats’ $1.9 trillion Covid-19 rescue bill Biden signed into law last month.
Wall Street is giving new CEOs a long honeymoon
Investors are loving new faces in Corporate America’s boardrooms, my CNN Business colleague Paul R. La Monica reports.
The thinking: Wall Street tends to reward companies that change leadership in an orderly fashion. Investors like to know a company has a solid plan for succession — and they’re typically willing to give new CEOs a bit of leeway as they settle into their jobs.
- The Federal Reserve’s latest interest rate decision arrives at 2 p.m. ET, followed by a press conference with Chair Jerome Powell.
- President Joe Biden will address a joint session of Congress at 9 p.m. ET.