Google Soars After Hours, Surpasses Apple As World's Most Valuable Stock, After Big Q4 Beat

If there were any concerns that retailers and other vendors of goods and services are hunkering down on their ad spending, those fears can be safely swept under the rug because just days after Facebook's dramatic beat, moments ago GOOG likewise slammed expectations by beating massively both on the top and bottom line.

Here are the key results:

  • Q4 EPS of $8.67 beat expectations of $8.08, up $2.00 from the $6.76 reported a year ago.
  • Revenues of $21.33 billion soared 18% compared to the year ago period; Traffic Acquisition Costs were $2.9 billion for the fourth quarter; net of TAC's revenues of $17.3 billion beat expectations of $16.9 billion
  • Aggregate paid clicks jumped 31%, while paid clicks on Google websites surged 40%
  • On the less than pleasant said, the cost per click dropped by 13%, well below the expected, suggesting some mobile tranisition pains
  • Free cash flow for the quarter soared to $4.3 billion, more than doubling the $2.8 billion a year ago, as a result of a drop in CapEx from $3.6 billion to $2.1 billion.
  • GOOG's cash rose to $73 billion

As Bloomberg adds, the results, reported for the first time under a new structure that separates Google’s main search and advertising operations from riskier investments, show that fourth-quarter revenue, excluding sales passed on to partners, rose 19 percent to $17.3 billion. That exceeded analysts’ average projection for $16.9 billion, according to data compiled by Bloomberg. Profit, before certain items, was $8.67 a share, beating the prediction for $8.08.

Google, which has been investing in artificial intelligence, self-driving cars and health technology, changed its name and structure last year to give investors a clearer view into the performance of its Web business and the money Alphabet Chief Executive Officer Larry Page is devoting to new projects. The health of Google’s main business and investor confidence in the company’s ability to innovate in new areas has helped to more than double the stock price in the past three years, putting Alphabet within sight of overtaking Apple Inc. as the world’s most valuable company.

“Everything’s working in their favor right now,” said James Cakmak, an analyst at Monness Crespi Hardt & Co. “You have the search experience being much more optimized to mobile than it had been, so that should help drive engagement.”

One notable item: GOOGL's effective tax rate was just 5%, far below the 18% from a year ago, however that will not stop the GOOG juggernaute, because while nowhere close to AAPL's gargantuan $200+ billion gross cash hoard, even with its measly $73BN in cash, as a result of the 6% surge in GOOGL stock, Google has now surpassed AAPL as the world's most valuable stock, which happens on the same day that FaceBook surpassed Exxon as the third most valuable stock.