Google Parent Alphabet's Search Outperformance, YouTube Shorts Momentum, AI-Focus: Munster's Analysis Of Q2 Results

Alphabet, Inc. GOOGL GOOG reported strong second-quarter results late Tuesday, sending its shares higher in after-hours trading.

Alphabet’s June quarter results were essentially in line with expectations, as Search outperformance more than offset the soft YouTube revenue, Loup Funds Managing Partner and co-founder Gene Munster said in a note. Search revenue at $40.7 billion came in better than the expected number of $40.3 billion, he noted.

YouTube’s miss underlines soft brand advertising, but search outperformed due to an increase in ad dollar market share, Munster said.

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“Google’s business is doing just fine,” the analyst said.

“As an investor in Google, I breathed a sigh of relief after decoding the outlook,” he added.

This doesn’t mean Alphabet shares are in the clear, given the likelihood of deterioration in the macro outlook, Munster said.

Management described the outlook as uncertain, which according to the analyst is “more bullish than it might sound.”

Two of the three factors the company outlined as uncertainty, namely comparisons and forex, have visibility, the analyst noted. Macro, meanwhile, continues to be an uncertainty, he added.

Munster’s Other Takeaways:

• Alphabet is investing heavily in AI, especially related to AI-powered multi-search.
• Search was driven by travel and retail.
• YouTube Shorts momentum is encouraging.

CEO Sundar Pichai reiterated that the company is slowing hiring, which will likely positively impact 2023 earnings.

Alphabet shares jumped 4.98% to $110.25 in after-hours trading on Tuesday, according to Benzinga Pro data.

Photo: Courtesy of Nguyen Hung Vu on flickr