Google, Microsoft Beat Earnings Estimates Thanks To Cloud Services, Ad Revenue

Google headquarters in California
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Google parent company Alphabet reported its first-quarter earnings today, both beating earnings-per-share (EPS) and revenue estimates. Microsoft also reported earnings today, for its fiscal third quarter 2021, and the company handily beat estimates as well; continuing their trend of domination as good, high-value tech stocks for the tech-interested investor. 

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“Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained,” Sundar Pichai, CEO of Google and Alphabet, said in the release. “We’ve continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations.”

Alphabet reported EPS of $26.29, compared to consensus EPS estimate of $15.56, and revenue stood at $55.3 billion, compared to estimates of $51.71 billion, according to Seeking Alpha.  Google’s revenue, up 34% from the same quarter last year, was driven by a growth in advertiser revenue and revenue from Google Cloud, according to the earnings statement.

“Total revenues of $55.3 billion in the first quarter reflect elevated consumer activity online and broad based growth in advertiser revenue,” Ruth Porat, CFO of Google and Alphabet, said in the release. “We’re very pleased with the ongoing momentum in Google Cloud, with revenues of $4.0 billion in the quarter reflecting strength and opportunity in both GCP and Workspace.”

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As for Microsoft, it reported EPS of $1.95 – up 39% – and revenue of $41.71 billion – up 19% –  compared to consensus EPS estimates of $1.78, and consensus revenue estimates of $40.85 billion, according to Seeking Alpha. Revenue was fueled by Microsoft Cloud, according to the earnings release. 

“Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning,” Satya Nadella, Microsoft CEO, said in the earnings statement. “We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform.”

Revenue in productivity and business processes was $13.6 billion and increased 15%, with LinkedIn revenue increasing 25%. In addition, the company said that revenue in Intelligent Cloud was $15.1 billion and increased 23%, while server products and cloud services revenue increased 26%, driven by Azure revenue growth of 50%.

“The Microsoft Cloud, with its end-to-end solutions, continues to provide compelling value to our customers generating $17.7 billion in commercial cloud revenue, up 33% year over year,” Amy Hood, executive vice president and Microsoft CFO, said in the release.

While the short-term market remains volatile, both Google and Microsoft have proven to be worthy long-term investments — just take a look at their share price history. Investors continue to debate when the next crash could take place, but if you’re looking to stick your money somewhere and keep it there for a good while, you probably won’t go wrong with these tech giants. Especially seeing as the pandemic has only bolstered their revenue and EPS growth.

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About the Author

Yaël Bizouati-Kennedy is a former full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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