Jul 29, 2021 (IAM Newswire via COMTEX) -- On Tuesday after the bell, Big Tech crushed earnings with Apple /zigman2/quotes/202934861/composite AAPL +0.75% , Alphabet Inc /zigman2/quotes/205453964/composite GOOG +0.19% and Microsoft /zigman2/quotes/207732364/composite MSFT +0.48% making a $57 billion quarterly profit. Their earnings report figures were powered by a rise in advertising spending. In simple words, this performance was enabled due to more consumers shopping online, showing that pandemic-era shift to digital is here to stay. These results showed that demand for digital services and gadgets has continued to soar, making tech the biggest beneficiaries of this year's gradual recovery, just as it proved to be one of the most resilient sectors during the Covid-19 downturn.
Shares of the world’s largest provider of search and video ads rose 3.3% in extended trading as Alphabet's results outperformed across all lines of its Google’s ad business: search, Google Network, and YouTube.
For the quarter ended on June 30 [th] , total revenue surged 61.6% from last year to $61.88 billion, easily exceeding Wall Street estimates of $56.16 billion, as estimated by Refinitiv. After subtracting TAC, or traffic acquisition costs, revenue amounted to $50.95 billion. Revenue from Google advertising rose almost 70% to $50.44 billion due to a "rising tide" of online activity among consumers and businesses alike, as CEO Sundar Pichai named it. This increase was majorly enabled by retail, travel and entertainment ads, which isn't surprising as people were eager to return to 'living with their full lungs'. Moreover, YouTube's ad revenue skyrocketed 83.7% from the year-ago quarter to $7 billion – nearly as much as Netflix /zigman2/quotes/202353025/composite NFLX -0.87% generated in quarterly revenue. The streaming video platform was the fastest-growing segment during the quarter, proving the strength of video advertising for the purpose of obtaining a direct response as well as attaining brand goals.
Google's earnings improved markedly compared to last year's period, when the pandemic pressured consumer spending and crushed advertising budgets. Vaccines have allowed people to shed the shackles of COVID-19 and spurred advertisers to spend more too to get consumers to splurge on their products. As a resut, Google and its corporate parent Alphabet Inc were the beneficiaries of increased corporate advertising budgets. Powered by Google, Alphabet's earnings amounted to $18.53 billion, or $27.26 per share. This is nearly a threefold increase compared to last year's earnings.
Google Cloud, which is behind Amazon.com Inc /zigman2/quotes/210331248/composite AMZN +3.31% and Microsoft Corp /zigman2/quotes/207732364/composite MSFT +0.48% in market share, managed to narrow its operating loss to $591 million.
The strong results come as Alphabet is facing four antitrust lawsuits from U.S. federal regulators which threaten to force major changes across its business. Earlier this month, 37 U.S. state and district attorneys general alleged earlier that Google “unlawfully” maintained a monopoly for its app store on Android phones. These lawsuits are expected to take years to resolve but their impact could result in major changes in the company's advertising and smart gadgets busines, in addition to significant fees.
The bottom line is that Big Tech profits have surged to unexpected heights even as the global economy starts to emerge from the coronavirus pandemic that gave an unforeseen boost to these companies last year as they anchored their products and services deeply within our everyday lifestyles.
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