After reporting stellar earnings at the end of last month, Google parent Alphabet Inc. (NASDAQ:GOOGL) saw a meaningful increase to its share price. Investors are continuing to pile into big tech, as momentum remains strong in the FAANG group of companies. Apple’s blowout quarter is fairly indicative of its long-term potential. I feel the market has reacted appropriately to this recent quarterly earnings report.
Alphabet reported quarterly revenue of $25.1 billion U.S. compared to estimates of $24.6 billion U.S. The company’s earnings per share was $10.13 U.S. per share compared to estimated EPS of $8.27 U.S.per share. The company announced it will be buying back up to $28 billion U.S. of class C stock. This move was generally cheered by investors, as reflected in the company’s share price move following this release.
The growth story with Alphabet remains solid. In combination with a business model that exhibits defensive characteristics, I expect the Alphabet portion of the FAANG trade will remain strong for the foreseeable future. Barring an antitrust issue in the future, no company is likely to touch Alphabet’s market share in its core businesses.
Investors looking for technology exposure with defensive characteristics in this market should consider large cap, blue chip names like Alphabet for the time being. Until this trade becomes less fashionable, investors seem prepared to continue to dump cash into big tech long term.
Invest wisely, my friends.
