Google parent Alphabet Inc (GOOGL) reported record quarterly sales, lifting communication services sector-related exchange traded funds.
On Wednesday, the Communication Services Select Sector SPDR Fund (NYSEArca: XLC) increased 2.0%, the Vanguard Communication Services (NYSEArca: VOX) gained 1.5%, and the Fidelity MSCI Communication Services ETF (NYSEArca: FCOM) rose 1.6%.
Meanwhile, Alphabet shares were up 8.1%. GOOGL makes up 11.7% of FCOM’s underlying portfolio, 11.6% of VOX, and 11.3% of XLC.
Alphabet’s internet advertising business strengthened on people spending more time using the Google search function as they shopped online and advertisers raised their marketing budgets, Reuters reports. The company revealed that it would execute a 20-to-one stock split as well.
Alphabet’s sales increased 32% to $75.3 billion over the fourth quarter, and for a third consecutive quarter, sales hit a record and beat the average estimate of $72 billion among financial analysts tracked by Refinitiv.
Google’s chief business officer, Philipp Schindler, said on an earnings call that consumers utilized the Google search tool to look for apparel and hobbyist items. Meanwhile, retail, finance, entertainment, and travel advertisers also raised their marketing budgets on the platform.
“Very robust advertising revenue growth implies the overall demand environment has stayed healthy amidst volatile supply chain and macro uncertainties,” MKM managing director Rohit Kulkarni said in a note to investors, CNBC reports.
Analysts were optimistic about Google’s future, arguing that Google, which generates more revenue from internet ads than any other company, will continue to enjoy solid growth after the pandemic. Companies that control key points to e-commerce, hybrid work, and streaming entertainment have enjoyed the accelerating trends toward digital communications.
“The pandemic has handily accelerated the world’s reliance on digital advertising,” Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, told Reuters. “Sitting through traditional TV advert breaks or reading billboards suddenly feels completely archaic in the age of streaming and mobile phone addiction.”
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