Google Parent Alphabet's Q1 Results: Analyst Delves On The Good, Bad And Ugly

Alphabet, Inc. GOOGL GOOG shares came under pressure late on Tuesday after the search giant's mixed quarterly results.  KeyBanc Capital Markets analyst Justin Patterson delved into the standouts and sore points from the earnings report.

The Good: Alphabet's board authorized a new $70 billion share repurchase plan, up 40% from the previous authorization, Patterson said. He expects buybacks to help minimize earnings per share growth headwinds in a volatile macroeconomic environment.

The analyst was also positive about Google's product innovation. He noted the Performance Max ad campaign tool achieved strong adoption among small and medium businesses and the use of Google Maps searched for shopping increased by nearly 100% year-over-year.

The Bad: Alphabet's Cloud segment revenue growth was in line with KeyBanc's estimate, the analyst said. Increased deal volume across industries and regions drove the strength, he added.

The analyst also noted that the Google Cloud Platform growth continued to outpace segment growth rates.

Forex had a 3% impact on revenues and a more substantial impact on the bottom line, in line with KeyBanc's expectation, the analyst said.

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The Ugly:  As opposed to KeyBanc's expectations that headwinds would not manifest meaningfully until the second quarter, YouTube revenues were about 8% below the firm's expectation, Patterson said. The analyst attributed the weakness to tough comparisons from direct response, Russia impacting brand spending, Apple, Inc. AAPL platform changes, and forex impact.

"Given the size of the miss, we expect investors will weigh whether  TikTok competition and Shorts engagement are impacting growth," the analyst said.

KeyBanc maintained an overweight rating and a $3,075 price target on Alphabet shares.

Alphabet shares slid 3.59% to $2,373 in after-hours trading on Tuesday, according to  BenzingaPro data 

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