Alphabet surges on strong demand for search and video advertising

Google’s parent company, Alphabet, said on Tuesday that its quarterly revenue and profit surged in the fourth quarter, lifted by strong demand for advertising on search results and YouTube videos and a sharp increase in sales at its cloud computing unit.

Sales in the quarter rose 23% from a year earlier to $56.9 billion, a record high for a quarter, and net profit rose 43% to $15.2 billion, Alphabet said. The strong results across its entire business line far surpassed analysts’ expectations.

Shares of Alphabet rose nearly 7% in after-hours trading.

Alphabet benefited from a continued rebound in its core business, advertisements on search results. In the early months of 2020, businesses pulled back on digital advertising, but spending has regained momentum as the pandemic has dragged on. Revenue from search advertising rose 17% to $31.9 billion in the fourth quarter, Alphabet said.

The company also highlighted its progress in diversifying its business. Quarterly revenue from YouTube ads rose 46%, and the cloud computing business posted a 47% gain from a year earlier, Alphabet said. Like the other major cloud computing providers, Amazon and Microsoft, Google has enjoyed a surge of demand during the pandemic.

For the first time in the company’s history, Alphabet also disclosed the profitability of its cloud business: It lost $5.6 billion in 2020, while revenue was $13.1 billion, the company said. Alphabet has invested heavily in the business, hoping to capitalize as many industries embrace the shift to the cloud.