Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stock is worth $1 trillion again -- and that's not good news.
Before earnings came out yesterday (after close of trading), the internet search giant was trading at about $1,500 a share and sported a market capitalization of $1.05 trillion. Today, investors are selling the stock -- still down 4.5% as of 1:30 p.m. EDT -- and the Google parent's shares are back at the $1 trillion level.
And yet Alphabet didn't even miss on earnings yesterday. It beat.
Heading into earnings, analysts had forecast that Alphabet would earn only $8.21 per share on sales of $37.4 billion. Alphabet beat those numbers with a stick, earning $10.13 on sales of $38.3 billion.
So why is the stock down today? Well, for one thing, that revenue "beat" that Alphabet reported last night was kind of Pyrrhic. Yes, on the one hand, it was better than expected. But it still represented a 2% decline in revenue from Q2 last year -- the first time Alphabet has ever reported a decline in revenue from its business.
Likewise the earnings number. Alphabet beat on earnings, but it did so by reporting 29% less GAAP profit in Q2 2020 than it recorded in Q2 2019.
Don't count Alphabet out just yet, though. Amid all the bad news, there was also good news to report. Google search revenue might have declined, but YouTube ad revenue climbed 6%. Alphabet's cloud computing business, too, although nowhere near as big as some of its rivals', got 43% bigger in the quarter.
Meanwhile, despite the GAAP profits drop, with operating cash rising and capital spending falling, Google generated a stellar $8.6 billion in positive free cash flow in the quarter -- 23% ahead of reported net income and up 32% year over year.
10 stocks we like better than Alphabet (A shares)
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Alphabet (A shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of June 2, 2020
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.