Alphabet Inc (GOOGL), Microsoft Corp see profits soar in Q3

Highlights

  • Alphabet Inc. (NASDAQ: GOOGL) posted revenue of US$65 billion, a 41% increase YoY in Q3, FY2021.

  • Microsoft Corporation (NASDAQ: MSFT) revenue was US$45.3 billion, a 22% increase YoY, and its GAAP net income rose 48% YoY in Q1, FY2022.

  • Alphabet stock gained 58.97% YTD, and MSFT stock grew 39.43% YTD.

Alphabet Inc. (NASDAQ: GOOGL) and Microsoft Corporation (NASDAQ: MSFT) reported strong third-quarter revenue growth after the closing bell on Tuesday.

GOOGL stock closed at US$2786.17, up 1.35%, and MSFT stock closed at US$310.11, up 0.64%.

Third-quarter highlights

Alphabet Inc. 

Alphabet posted revenue of US$65 billion, up 41% increase YoY, compared to US$46 billion in the September quarter of 2020. 

The Google Services revenue was US$59.88 billion; Google Cloud segment revenue was US$4.99 billion, other bets contributed US$182 million, and hedging gains were US$62 million.

Google CEO Sundar Pichai said that Google’s robust investments in AI have helped build more robust products for consumers and partners. In addition, he said Google’s cloud services helped organizations collaborate even as digital transformation and shift to hybrid work continue.

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The company’s operating income grew to US$21 billion from US$11.2 billion in the third quarter of 2020. The net income was US$18.9 billion, up 68% YoY. The earnings per share diluted were US$27.99 compared to US$16.40 in the corresponding quarter of 2020.

During the quarter, the company repurchased and retired 4.6 million aggregate shares for US$12.6 billion. The company had 150,028 employees at the end of the September quarter compared to 132,121 in the year-ago period. 

Alphabet has a market capitalization of US$1.85 trillion and a P/E of 30.1. The Mountain View, California-headquartered technology company is the world’s top internet and media company. 

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Earning update: Alphabet Inc. (NASDAQ: GOOGL) and Microsoft Corporation (NASDAQ: MSFT).

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Microsoft Corporation 

Microsoft’s revenue was US$45.3 billion, up 22%, compared to US$37.15 billion a year ago.

Revenue from Productivity and Business Processes was US$15.0 billion, up 22% YoY, Intelligent Cloud revenue was US$17.0 billion, an increase of 31% YoY, and More Personal Computing segment revenue was US$13.3 billion, up 12% YoY.

CEO Satya Nadella said productivity and affordability of its products and services have continued to help improve the company’s quarterly performance.

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Microsoft’s operating income increased by 27% to US$20.2 billion. The GAAP net income was US$20.5 billion, and non-GAAP net income was US$17.2 billion, up 48% and 24% YoY, respectively.

The GAAP earnings per share diluted was US$2.71, an increase of 49%, and non-GAAP earnings per share diluted were US$2.27, an increase of 25% YoY.

Microsoft’s share-repurchase and dividends payment in Q1 FY2022 was worth US$10.9 billion.

Microsoft has a market capitalization of US$2.3 trillion and a P/E ratio of 38.54. Its current dividend yield is 0.72%, and its annualized dividend is US$2.48.

The Redmond, Washington-based technology company develops and licenses software for consumers and enterprises.

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Bottomline

The NASDAQ 100 technology index gave a 21.90% return YTD. By contrast, the MSFT grew by 39.43% YTD, while Alphabet rose 58.97% YTD. However, investors must exercise due diligence before investing in the stock market.  

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