Amid a sell-off of many growth stocks in recent weeks, shares of search giant Alphabet (GOOGL 1.27%) (GOOG 1.25%) have been resilient. Indeed, the stock is up 5% over the past month and 17% year to date. The stock's strong performance this year reflects impressive momentum in Alphabet's underlying business. In the company's second quarter, the online search giant's revenue growth accelerated and its earnings per share crushed analyst estimates.
Investors will get to see how the company performed during its third quarter on Oct. 28, when Alphabet is scheduled to report its quarterly results. With such a strong quarter in the rearview mirror, the stakes are high going into the company's third-quarter update next month.
Here's what investors will want to check on when Alphabet's latest results are released.
Image source: Alphabet.
Revenue growth
In Alphabet's second quarter, the company's revenue increased 19% year over year to $39.94 billion. This was notably an acceleration compared with the company's 17% revenue growth in Q1. The key growth drivers for the quarter were the usual catalysts: mobile search, YouTube, and Google Cloud. But these catalysts collectively kicked it up a notch compared with the prior quarter.
In Alphabet's third quarter, analysts expect total revenue of $40.3 billion, implying another quarter of 19% growth.
Google's "other" revenue
The company's "Google other" revenue, or revenue from cloud, the Google Play app store, and hardware, increased 40% year over year in Q2. This put the segment's revenue at $6.18 billion, accounting for 16% of total revenue. With the segment growing faster than Alphabet's total revenue, it is growing as a percentage of revenue. In the year-ago quarter, the segment represented 14% of total revenue.
Investors should expect outsize growth in this segment once again, as Alphabet's cloud business has been "Google other's" primary driver -- and that business is showing no signs of letting up.
Google Cloud
While Alphabet doesn't break out its cloud revenue specifically, management does occasionally provide some tidbits to help investors appreciate its momentum.
"Q2 was another strong quarter for Google Cloud, which reached an annual revenue run rate of over $8 billion and continues to grow at a significant pace," said Google CEO Sundar Pichai in the company's second-quarter earnings call.
Key to Cloud's growth has been the company's Google Cloud Platform (GCP), or Alphabet's suite of cloud computing services that run on its servers. GCP was helped by strong demand for Alphabet's compute and data analytics products, management explained in the call.
Investors should look for more strong momentum in Alphabet's cloud business when the company reports its third-quarter results.
Investors can tune into the quarterly update after market close on Monday, Oct. 28.
