Google's Earnings Brings it Closer to $1 Trillion

Google parent company Alphabet just reported earnings today, and the results outperformed expectations. Google Play Store revenues and advertising business saw admirable growth, and their guidance for the future seems rather positive. Google's "other bets", which include the self-driving car company Waymo and Nest, reported greater revenues, but faced increased expenses.

Overall, these are positive news, considering that the company was hit with a massive $5B fine from the EU over antitrust issues. The EU claimed that the Google Play Store restricts competition as it automatically comes pre-installed with Google's suite of apps, such as Google Search, which is forced upon manufacturers by Google as a way to empower and encourage its search engine. Due to this fine, Google's net income decreased from $8.3B to $3.2B for the quarter. This reveals how consistent government trouble can cause a major hindrance to the company's long term growth. In fact, Google encountered a $2.7B fine last year as the EU accused the company of utilizing its search platform to direct users to its own shopping platform, which the EU claimed restricted competition. If Google continues this disregard for laws and regulations, its business can see considerable problems in the future.

In addition, Google has increased spending for capital expenditures as it builds more data centers to expand its cloud projects and services. This bet displays the company's commitment to better compete with Amazon Web Service and Microsoft's Azure. In addition, these new facilities will be used to foster research and development of machine learning, revealing Google CEO Sundar Pichai's ambitions for the expansion of artificial intelligence in the utility of Google Assistant. The results and their benefits will become more apparent in the future, but it is clear in which sectors Google will experience growth.

Based by after-hours trading following earnings, Alphabet is predicted to reach a valuation of $875B when it opens tomorrow. This is comparable to Apple's valuation of $943B and Amazon's worth of $880B. While Apple and Amazon are yet to report earnings, Alphabet is a worthy rival in the race to a $1 trillion valuation, as well as Microsoft. Upon Amazon's earnings, investors will look forward to growth in Prime subscribers and the success of its annual Prime Day, while Apple investors will hope to see growth in iPhone X sales and international revenue as the company struggles in India. The finish line is approaching quickly.