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What Lies Ahead of Alphabet Heavy ETFs After Q3 Earnings?
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Alphabet (GOOGL - Free Report) reported its third-quarter 2023 earnings results on Oct 24 after market close. Earnings of $1.55 per share, surpassed the Zacks Consensus Estimate by 6.9%, marking an improvement of 46.2% year over year. GOOGL has Zacks Growth Score of A.
Earnings Snapshot
Alphabet, which belongs to the Zacks Internet - Services industry, posted revenues of $76.7 billion for the quarter ended September 2023, increasing 11% year over year. The growth was driven by solid Search and YouTube’s performance.
Net revenues, excluding total traffic acquisition costs or TAC, were $64.05 billion surpassing the consensus mark of $63.13 billion. The figure rose 11.8% from the year-ago quarter’s level.
Sluggish Cloud Revenue
Alphabet continued to witness sluggishness in Google Network ads, which remained a concern. The company experienced slow growth in Google Cloud revenues, which was a major negative. Accounting for 10.9% of the quarter’s total revenues, Google Cloud revenues rose 22.5% year over year to $8.41 billion. However, the reported metric missed the Zacks Consensus Estimate of $8.54 billion.
According to Reuters, Alphabet’s Google Cloud revenue failing to beat estimates showcases the significance investors puts on the company delivering gains in the artificial intelligence (AI) domain. Headwinds from global factors prompting companies to curb their spending on cloud-related services highlight the slowdown in Google Cloud’s revenues, falling 5.5% to 22.5% from 28% in the previous quarter.
ETFs in Focus
The earnings results have a huge impact on ETFs heavily invested in this Internet giant, with shares of GOOGL falling about 9.53% (as of Oct 25) after it reported its third-quarter earnings results on Oct 24 after market hours. Here, we have highlighted four ETFs with double-digit exposure to Alphabet and look into how the funds have performed since earnings were reported.
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
Fidelity MSCI Communication Services Index ETF seeks to track the performance of the MSCI USA IMI Communication Services 25/50 Index with a basket of 107 securities. The fund has amassed an asset base of $796.03 and charges an annual fee of 0.08%.
Fidelity MSCI Communication Services Index ETF has an exposure of 13.48% in GOOGL and has fallen about 4.43% (as of Oct 25).
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund seeks to track the performance of the Communication Services Select Sector Index with a basket of 22 securities. The fund has amassed an asset base of $13.57 billion and charges an annual fee of 0.10%.
Communication Services Select Sector SPDR Fund has an exposure of 13.04% in GOOGL and has fallen about 4.22% (as of Oct 25).
iShares Global Comm Services ETF seeks to track the performance of the S&P Global 1200Communication Services 4.5/22.5/45 Capped Index with a basket of 64 securities. The fund has amassed an asset base of $278.78 million and charges an annual fee of 0.42%
iShares Global Comm Services ETF has an exposure of 12.79% in GOOGL and has fallen about 3.66% (as of Oct 25).
Vanguard Communication Services ETF seeks to track the performance of the MSCI US Investable Market Communication Services 25/50 Index with a basket of 117 securities. The fund has amassed an asset base of $3.4 billion and charges an annual fee of 0.10%.
Vanguard Communication Services ETF has an exposure of 12.59% in GOOGL and has fallen about 4.48% (as of Oct 25).
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What Lies Ahead of Alphabet Heavy ETFs After Q3 Earnings?
Alphabet (GOOGL - Free Report) reported its third-quarter 2023 earnings results on Oct 24 after market close. Earnings of $1.55 per share, surpassed the Zacks Consensus Estimate by 6.9%, marking an improvement of 46.2% year over year. GOOGL has Zacks Growth Score of A.
Earnings Snapshot
Alphabet, which belongs to the Zacks Internet - Services industry, posted revenues of $76.7 billion for the quarter ended September 2023, increasing 11% year over year. The growth was driven by solid Search and YouTube’s performance.
Net revenues, excluding total traffic acquisition costs or TAC, were $64.05 billion surpassing the consensus mark of $63.13 billion. The figure rose 11.8% from the year-ago quarter’s level.
Sluggish Cloud Revenue
Alphabet continued to witness sluggishness in Google Network ads, which remained a concern. The company experienced slow growth in Google Cloud revenues, which was a major negative. Accounting for 10.9% of the quarter’s total revenues, Google Cloud revenues rose 22.5% year over year to $8.41 billion. However, the reported metric missed the Zacks Consensus Estimate of $8.54 billion.
According to Reuters, Alphabet’s Google Cloud revenue failing to beat estimates showcases the significance investors puts on the company delivering gains in the artificial intelligence (AI) domain. Headwinds from global factors prompting companies to curb their spending on cloud-related services highlight the slowdown in Google Cloud’s revenues, falling 5.5% to 22.5% from 28% in the previous quarter.
ETFs in Focus
The earnings results have a huge impact on ETFs heavily invested in this Internet giant, with shares of GOOGL falling about 9.53% (as of Oct 25) after it reported its third-quarter earnings results on Oct 24 after market hours. Here, we have highlighted four ETFs with double-digit exposure to Alphabet and look into how the funds have performed since earnings were reported.
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
Fidelity MSCI Communication Services Index ETF seeks to track the performance of the MSCI USA IMI Communication Services 25/50 Index with a basket of 107 securities. The fund has amassed an asset base of $796.03 and charges an annual fee of 0.08%.
Fidelity MSCI Communication Services Index ETF has an exposure of 13.48% in GOOGL and has fallen about 4.43% (as of Oct 25).
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund seeks to track the performance of the Communication Services Select Sector Index with a basket of 22 securities. The fund has amassed an asset base of $13.57 billion and charges an annual fee of 0.10%.
Communication Services Select Sector SPDR Fund has an exposure of 13.04% in GOOGL and has fallen about 4.22% (as of Oct 25).
iShares Global Comm Services ETF (IXP - Free Report)
iShares Global Comm Services ETF seeks to track the performance of the S&P Global 1200Communication Services 4.5/22.5/45 Capped Index with a basket of 64 securities. The fund has amassed an asset base of $278.78 million and charges an annual fee of 0.42%
iShares Global Comm Services ETF has an exposure of 12.79% in GOOGL and has fallen about 3.66% (as of Oct 25).
Vanguard Communication Services ETF (VOX - Free Report)
Vanguard Communication Services ETF seeks to track the performance of the MSCI US Investable Market Communication Services 25/50 Index with a basket of 117 securities. The fund has amassed an asset base of $3.4 billion and charges an annual fee of 0.10%.
Vanguard Communication Services ETF has an exposure of 12.59% in GOOGL and has fallen about 4.48% (as of Oct 25).