Alphabet Inc. CEO Sundar Pichai warned of potential risks to key internet businesses like Google LLC's search and services during an otherwise upbeat fourth-quarter 2021 earnings update.
Shares of the company jumped after the financial report, in which Alphabet beat revenue and earnings expectations. Alphabet shares on Feb. 2 were up nearly 10% at the opening bell, briefly crossing the $3,000 mark, a first for the company. The shares pulled back a bit by midday, however, trading just under $3,000 as of about 12 p.m. ET.
Speaking during the Feb. 1 earnings call, Pichai told Wall Street analysts that some antitrust reforms under consideration by U.S. legislators risked damaging or breaking Google's services and would "hurt American competitiveness by disadvantaging solely U.S. companies." Pichai urged Congress to "take time to consider the unintended consequences" of planned Big Tech regulation.
Lawmakers voted Jan. 20 to advance a bill that would prohibit major tech companies from promoting their own products over those of competitors. This week, several hearings on Capitol Hill focused on tech and broadband market competition and how to address the outsized influence of large companies.
Analysts told S&P Global Market Intelligence prior to the earnings announcement that Alphabet would have to prove it can still maintain steady revenue growth. The valuation of the internet services company was bolstered in recent quarters by pandemic-driven growth in digital as demand rapidly increased for online entertainment, cloud services and web search tools.
Alphabet's Google advertising segment, which accounts for the majority of its revenue, reported year-over-year growth of 32.6%, to $61.24 billion in the fourth quarter of 2021. That represents a deceleration from the past two quarters, but the growth rate remained high by historical standards. The company reported total revenue of $75.35 billion, above Wall Street expectations of $71.83 billion, according to S&P Capital IQ consensus data.
Alphabet in its earnings release also announced a 20-for-1 stock split in the form of a one-time stock dividend with a planned date for July 15 of this year.