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Will Google ETFs Keep Shining on Q1 Earnings Optimism?
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Google-parent Alphabet (GOOGL - Free Report) recently reported first-quarter 2021 results, with earnings and revenues topping estimates and increasing on a year-over-year basis. Notably, Alphabet’s share price has surged about 3% since posting the impressive earnings results on Apr 27.
Q1 Earnings at a Glance
Earnings per share were $26.29, surpassing the Zacks Consensus Estimate by 68% and increasing 166.4% year over year. Revenues totaled $55.31 billion, rising 34.4% year over year (32% at constant currency). Net revenues, excluding total traffic acquisition cost or TAC (TAC is the portion of revenues shared with Google’s partners, and amount paid to distribution partners and others who direct traffic to the Google website), stood at $45.60 billion. Net revenues surpassed the Zacks Consensus Estimate by 7.4%, largely on strong performances by the company’s search, cloud and YouTube businesses.
Alphabet’s business segments include Google Services, Google Cloud and Other Bets. Revenues from the Google Services business rose 34% year over year to $51.18 billion, accounting for 92.5% of quarterly revenues. Under the services business, search revenues from Google-owned sites climbed 30.1% year over year to $31.88 billion. YouTube advertising revenues rose 48.7% year over year to $6 billion, while Network advertising revenues climbed 30.2% to $6.8 billion.
Google other revenues — which consists of Google Play and YouTube non-advertising revenues — were $6.49 billion for the first quarter, up 46.4% year over year. Total Google advertising revenues grew 32.3% year over year to $44.68 billion.
Moreover, Google Cloud revenues grew 45.7% year over year to $4.05 billion, accounting for 7.3% of the quarterly revenues. Notably, with the aggravating coronavirus situation, some industries like cloud computing have been thriving with majority of people working from home. Other Bets revenues were $198 million, up 46.7% year over year, accounting for 0.4% of total first-quarter revenues.
Meanwhile, TAC was up 30.3% year over year to $9.71 billion.
Commenting on the results, Sundar Pichai, CEO of Google and Alphabet, reportedly said, “over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We’ve continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations.”
ETFs in Focus
The earnings results might have a huge impact on ETFs that are heavily invested in this Internet giant. Below we have highlighted four ETFs with double-digit exposure to Alphabet (see: all the Technology ETFs here).
This fund targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 113 stocks in its basket, Alphabet takes the second (Class A) and third (Class C) spot, with 11.2% and 11.1% share, respectively. VOX has AUM of $3.76 billion and charges 10 basis points (bps) in annual fees.
It has gained 0.7% since Alphabet's first-quarter earnings release. The fund has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: ETFs to Win on Biden's Infrastructure Plan).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 103 stocks in its basket, with Alphabet occupying the second (Class A) and third position (Class C) at 11.18% and 11.05%. The product has amassed $742.7 million in its asset base and charges 8 bps in annual fees.
The fund is up 0.7% since the earnings results. It has a Zacks ETF Rank #3, with a Medium-risk outlook.
The Communication Services Select Sector SPDR Fund (XLC - Free Report)
This ETF tracks the communication services sector of the S&P 500 Index and has accumulated $13.10 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.83% and 12.40% weights, respectively. The product charges 12 bps in annual fees.
This ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 70 stocks in its basket, with Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.50% and 12.09% weights, respectively. The fund has amassed $321.8 million in its asset base. Its expense ratio came in at 0.46%.
The fund has gained 1.3% since the earnings release. IXP has a Zacks ETF Rank #3, with a Medium-risk outlook.
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Will Google ETFs Keep Shining on Q1 Earnings Optimism?
Google-parent Alphabet (GOOGL - Free Report) recently reported first-quarter 2021 results, with earnings and revenues topping estimates and increasing on a year-over-year basis. Notably, Alphabet’s share price has surged about 3% since posting the impressive earnings results on Apr 27.
Q1 Earnings at a Glance
Earnings per share were $26.29, surpassing the Zacks Consensus Estimate by 68% and increasing 166.4% year over year. Revenues totaled $55.31 billion, rising 34.4% year over year (32% at constant currency). Net revenues, excluding total traffic acquisition cost or TAC (TAC is the portion of revenues shared with Google’s partners, and amount paid to distribution partners and others who direct traffic to the Google website), stood at $45.60 billion. Net revenues surpassed the Zacks Consensus Estimate by 7.4%, largely on strong performances by the company’s search, cloud and YouTube businesses.
Alphabet’s business segments include Google Services, Google Cloud and Other Bets. Revenues from the Google Services business rose 34% year over year to $51.18 billion, accounting for 92.5% of quarterly revenues. Under the services business, search revenues from Google-owned sites climbed 30.1% year over year to $31.88 billion. YouTube advertising revenues rose 48.7% year over year to $6 billion, while Network advertising revenues climbed 30.2% to $6.8 billion.
Google other revenues — which consists of Google Play and YouTube non-advertising revenues — were $6.49 billion for the first quarter, up 46.4% year over year. Total Google advertising revenues grew 32.3% year over year to $44.68 billion.
Moreover, Google Cloud revenues grew 45.7% year over year to $4.05 billion, accounting for 7.3% of the quarterly revenues. Notably, with the aggravating coronavirus situation, some industries like cloud computing have been thriving with majority of people working from home. Other Bets revenues were $198 million, up 46.7% year over year, accounting for 0.4% of total first-quarter revenues.
Meanwhile, TAC was up 30.3% year over year to $9.71 billion.
Commenting on the results, Sundar Pichai, CEO of Google and Alphabet, reportedly said, “over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We’ve continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations.”
ETFs in Focus
The earnings results might have a huge impact on ETFs that are heavily invested in this Internet giant. Below we have highlighted four ETFs with double-digit exposure to Alphabet (see: all the Technology ETFs here).
Vanguard Communication Services ETF (VOX - Free Report)
This fund targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 113 stocks in its basket, Alphabet takes the second (Class A) and third (Class C) spot, with 11.2% and 11.1% share, respectively. VOX has AUM of $3.76 billion and charges 10 basis points (bps) in annual fees.
It has gained 0.7% since Alphabet's first-quarter earnings release. The fund has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: ETFs to Win on Biden's Infrastructure Plan).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 103 stocks in its basket, with Alphabet occupying the second (Class A) and third position (Class C) at 11.18% and 11.05%. The product has amassed $742.7 million in its asset base and charges 8 bps in annual fees.
The fund is up 0.7% since the earnings results. It has a Zacks ETF Rank #3, with a Medium-risk outlook.
The Communication Services Select Sector SPDR Fund (XLC - Free Report)
This ETF tracks the communication services sector of the S&P 500 Index and has accumulated $13.10 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.83% and 12.40% weights, respectively. The product charges 12 bps in annual fees.
The fund has risen 0.9% since the earnings release. It has a Zacks ETF Rank #2 (Buy) (read: Will Disney (DIS) ETFs Shine Post Q1 Earnings?).
iShares Global Comm Services ETF (IXP - Free Report)
This ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 70 stocks in its basket, with Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.50% and 12.09% weights, respectively. The fund has amassed $321.8 million in its asset base. Its expense ratio came in at 0.46%.
The fund has gained 1.3% since the earnings release. IXP has a Zacks ETF Rank #3, with a Medium-risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>