Google parent Alphabet Inc. (GOOG, GOOGL) crushed earnings last week, reporting a 62% revenue surge to $61.9 billion. That beat analysts estimates by almost $6 billion. The company reported diluted earnings per share (EPS) of $27.26, blowing away estimates of $19.35. Alphabet is marching ever closer to becoming a $2 trillion company.
- Google parent Alphabet shattered earnings expectations last week.
- Big earnings attract institutional investors over the long term.
The recent earnings results shouldn’t have been a surprise, however, as the tech giant has a long history of beating expectations according to MarketBeat.
Advertising growth and YouTube are propelling revenue to phenomenal levels. The company has rock-solid sales, earnings growth, and profitability. And we can see that in the table below. (Juice stands for great, so-so stands for good, and not ideal stands for underwhelming).
While earnings beats and solid fundamentals are paramount in assessing the viability of an investment, it’s also crucial to see what big investors think of the stock. In the case of Alphabet, we see big love. We can look at technical levels to get an idea of how the stock is trading as well as volume to gauge demand.
In the table below, we see that Alphabet is trading at near-term and one-year highs. The 50-, 100-, and 200-day moving averages are stacked in a positive-trending way. The stock is outperforming the S&P 500 by a mile and has big relative strength.
What we can also see on the technical table above is what Big Money investors think of Alphabet stock. We see Big Money buy signals. To simplify this, MAPsignals has a way of identifying when there is big accumulation of shares. This can be thought of as stock prices shooting higher on a big swell in volume.
When we get a lot of these signals in series, it can set up to be an outlier stock. An outlier is a stock that consistently outperforms the market many years running. Alphabet is an original outlier.
If you want to try and gauge demand for stocks at home, check out the following TradingView chart. In it, you can see all of the Big Money buy signals over the past year. Look how the price spikes often line up with volume spikes. We call that the stairway to heaven.
As we can see, Alphabet stock has an excellent upward trend over the past year, and we can see the same basically since it came on the scene in 2004. I calculate 112 Big Money instances since the stock went public. That’s a lot. Here are a handful of them to give you an idea. Putting 112 bubbles in a chart is overkill.
Stocks don’t go up by themselves—they go up because buying pressure exceeds selling pressure. This is fine day to day, but in the long term, big institutional demand really can propel stocks to the moon. And Alphabet has benefitted from big investor love for a long time now.
Based on the company’s continued history of shattering earnings and growing profits, I foresee this trend to continue. And the more that Big Money piles into Alphabet, the more conviction I have in saying so.
The Bottom Line
So, let’s tie this all together. Google parent Alphabet trounced earnings last week. It’s not a surprise given the company’s history of doing so. The stock performance has been stellar since it showed up, and a big part of that is Wall Street’s continued demand. Based on its fundamentals, earnings history, and massive Big Money buying in the shares, I see a continued bright future for Alphabet.
Disclosure: The author holds long positions in GOOG & GOOGL in personal and managed accounts at the time of publication.