Alphabet was the winner of Big Tech’s Gains Extravaganza. Here’s why.

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With the US Department of Justice’s antitrust lawsuit as a backdrop, Wall Street was overwhelmingly pleased with Alphabet’s third quarter results.

The search giant far exceeded expectations when it reported Thursday, and

Alphabet

the stock (ticker: GOOGL) rose 4% to $ 1,620.60 on Friday afternoon. Alphabet was almost on its own, as the shares of many other tech titans who reported profits in Thursday’s play-off slipped.

UBS analyst Eric Sheridan, who has a buy on the stock, raised his price target to $ 2,050 from $ 1,970. Sheridan wrote in a note Friday that Alphabet had quashed questions about the online advertising take-up rate. The analyst also praised the company’s decision to further separate Google’s cloud business from its office suite and other products that had previously been bundled into the segment.

Sheridan found only two flaws in the earnings report: Alphabet executives warned that the uncertainty of Covid-19 still lurks in the background and the so-called traffic acquisition costs of the company were higher than his team’s estimates.

Traffic acquisition costs are the fees Google pays companies such as carriers, device manufacturers, and others to make Google the default search engine. In Justice Department antitrust lawsuit, government lawyers say Google is paying

Apple

8 to 12 billion dollars per year for such a placement among various Apple products.

Truist analyst Youssef Squali said in a research note on Friday that Alphabet has made significant progress due to the effects of the Covid-19 pandemic on many other aspects of people’s lives online. Squali increased its target price to $ 2,000 from $ 1,850.

Squali wrote that Alphabet has exceeded revenue expectations largely due to improvements in Google’s various advertising activities (search, its display network, and YouTube, for example) and because direct response ads continue to perform well, as brand advertising begins to pick up. Squali also praised Alphabet’s decision to separate Google Cloud, adding that it will allow his team to more accurately benchmark the business unit against its rivals and allow investors to take a close look at the segment’s profitability.

JP Morgan analyst Doug Anmuth reiterated the equivalent of a buy note and his price target of $ 1,870 in a note to customers on Friday. He specifically pointed to YouTube ads, saying that revenue was almost back to pre-pandemic levels of around 35% of his total first quarter ad traffic. On Alphabet’s decision to report its cloud business as a separate segment, Anmuth wrote that he suspected this could be because Google Cloud is slightly profitable on a GAAP operating profit basis (or generally accounting principles. recognized).

In a note Thursday after the results, RBC Capital Markets analyst Mark Mahaney wrote that the coronavirus pandemic has accelerated the evidence, which means companies involved in e-commerce, communications and online tools for work and education will benefit. Alphabet is one such company.

Mahaney noted that Google was the only one of the big three cloud computing giants –

Amazon.com

(AMZN),

Microsoft

(MSFT), being the others – to show the acceleration of income growth. The analyst raised his target price to $ 1,900 from $ 1,700 and maintained the equivalent of a buy rating.

Alphabet shares have gained 21% this year,

S&P 500

the index rose 0.5%.

Write to Max A. Cherney at [email protected]