Jefferies Believes Alphabet Inc (NASDAQ: GOOGL) Still Has Room to Grow

Earnings Preview Search Giant Alphabet Kicks Off A Busy Week

The technology giant reported that revenue grew to US$26 billion in the recently ended quarter, and that profit would have tallied almost US$6.3 billion if it were not for a US$2.74 billion antitrust fine levied on search engine Google by the European Commission.

The search and advertising giant reported earnings of $5.01 per share, down from $7 per share during the same period a year ago. (GOOG, GOOGL), the parent company of Google, Thursday said its profit for the second quarter dropped from a year ago hurt largely by a hefty fine imposed by European regulators.

Reynders McVeigh Capital Management LLC raised its position in shares of Alphabet Inc.

But in after-hours trading Monday, investors, who had bid up Alphabet almost 30% this year, drove the stock down almost 3% to $969.

Alphabet noted that revenue from advertising from all their regions around the world increased when compared with first-quarter a year ago. The value of the company's investment in Alphabet Inc. decreased from $2,000 to $1,000 a change of 50.0% for the reporting period.

There is one maybe-overlooked part of Google's report that we'll highlight: The company's "traffic acquisition cost", or TAC, actually increased as a percentage of Google's revenue year-over-year.

Alphabet's overall revenue topped expectations thanks in part to growth in the "other revenues", the division of Google which includes segments like the hardware and cloud businesses. Analyst firm Stifel lowered its estimates from $7.91 per share to $4.02 per share, while JMP's estimate went from $8.54 per share to of $4.64 per share.

"Google continues to lead the shift to AI driven computing", Google CEO Sundar Pichai said on the company's earnings call.

Alphabet (NASDAQ:GOOGL) last announced its earnings results on Monday, July 24th.

Alphabet shares are now up by nearly 30% this year due to investor optimism on the company's outlook. The subsidiary's ad revenue rose 18.4 percent in Q2 to $22.7 billion.

Other Bets revenues were $248 million. Alphabet's other child companies like thermostat maker Nest, self-driving company Waymo and Fiber recorded an operating loss of $772 million which is less than $855 million back in Q2 2016.

Google's European Union fine had a significant impact on analyst expectations for the quarter. Finally, Pacific Crest reaffirmed an overweight rating and issued a $1,040.00 price target on shares of Alphabet in a research note on Saturday, March 11th.