Google Blows Away Earnings Forecast on Massive Advertising Recovery

A huge surge of advertising in the final months of 2020 saw Google’s revenue jump far above Wall Street forecasts, boosting shares in the firm’s parent company Alphabet on Wednesday.

CNBC reports that tech giant Google enjoyed a huge increase in revenue due to an unexpected surge of advertising in the final months of last year. This raised Google’s revenue far above Wall Street forecasts and boosted shares in Google’s parent company, Alphabet, on Wednesday.

With many holiday shoppers turning to e-commerce for their gift purchases amidst the coronavirus pandemic, along with a partial return by advertisers who were affected the worst during the pandemic, Google saw its strongest quarter in years with revenue jumping 22 percent.

Google reported that its ad revenue for the fourth quarter was $46.20 billion, up 22 percent from $37.93 billion in the same quarter last year. YouTube ads, which delivered a total of $6.89 billion in Q4, showed a 46 percent jump from this time last year when the business segment earned $4.72 billion.

The company’s Chief Financial Officer, Ruth Porat, stated that the rebound reminded her of the sharp recovery following the 2008 financial crisis. Porat stated that it reflected a “broad-based reengagement . . . across industries,” with advertisers investing more of their budgets into digital media as they searched for effective ways to reach their audience during the pandemic.

Alphabet saw its revenue grow 13 percent for the years as a whole even as non-digital sectors of the global advertising industry contracted by around 20 percent. Christopher Rossbach, chief investment officer of J Stern & Co, an Alphabet investor, stated that the numbers showed “there is still a massive shift to online advertising” underway. He also highlighted “the strength of Google’s business model and its resilience in a time of crisis.”