Alphabet Inc has reported a better-than-expected quarterly profit, sending shares of Google’s parent soaring in after-hours trading and making it the most valuable US company ahead of rival Apple Inc.
It was the first quarter the company provided information on what it calls “Other Bets” such as self-driving cars, and the solid results eased investor concerns about the company’s spending on ambitious projects.
“As long as the core business continues to operate well with accelerated revenue … investment in those businesses can continue,” JMP Securities’ Ronald Josey said.
Alphabet said consolidated revenue jumped 17.8 per cent to $21.33 billion in the fourth quarter ending December 31, from $18.10 billion a year earlier.
Analysts had expected $20.77 billion, according to Thomson Reuters Institutional Brokers’ Estimate System.
Adjusted earnings of $8.67 per share handily beat analysts’ average estimate of $8.10 per share.
Total operating losses on the Other Bets — which include glucose-monitoring contact lenses and internet balloons — increased to $3.57 billion in the 12 months ending December 31, and $1.2 billion in the fourth quarter.
In a call with analysts, chief financial officer Ruth Porat attributed the strong earnings to “increased use of mobile search by consumers”, as well as “ongoing momentum” in YouTube and programmatic advertising.
Google’s shares were up almost 6 per cent at $795.68 in after-hours trading, after breaking through the $800 level.
Alphabet’s combined share classes were worth $555 billion, compared with Apple, which had a value of about $534 billion.
Alphabet will officially overtake Apple in market value if both companies’ shares open around current levels on Tuesday.