As all the earnings plaudits fall upon the likes of Amazon and Apple this week, one glaring win from Google’s report needs to be addressed.
While the eyes of the media focus squarely on the likes of Amazon and Mastercard today, we thought we should step back and look at the unsung Big Tech winner of the week.
Alphabet.
“Do you mean Google?”
More specifically, I mean YouTube, but we’ll get to that. First, let’s recap Alphabet’s Q2 performance:
- Earnings per share (EPS): $27.26 v.s. $19.34 per share estimated.
- Revenue: $61.88 billion v.s. $56.16 billion expected.
- Total Google ad revenue: $50.44 billion — up 69% YoY.
A pretty impressive spread, and, as usual, Google ads make up the vast majority of its revenue. But it’s Alphabet’s YouTube revenue — $7.00 billion vs $6.37 billion expected — that should be getting investors out of their seats, for three reasons:
- That’s a revenue jump of 83% in a single year.
- Compare that to Netflix, the world’s foremost service in streaming. Netflix booked $7.34 billion in revenue during the same period, which was just 19.4% up from a year ago. What’s more, almost all of that revenue is from subscriptions, Alphabet hasn’t even released how much YouTube makes from its own premium model — the $7 billion is from advertising alone.
- More than 120 million people watched YouTube on a television set in June alone, up from 100 million a year ago. It’s swiftly encroaching on Netflix’s living room turf.
- Finally, YouTube does not have the same concerns with original content production costs as Netflix or Amazon Prime, etc. Its customers create all the content for it, for which they pay out far less than it would cost to make a show or movie.
Following issues surrounding advertising boycotts, data breaches, and antitrust threats, it is no small thing for Google to own a Netflix-sized streaming service that continues to grow.
So, when considering an investment in Big Tech, maybe it’s worth looking into Alphabet for more than just Google.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.