Alphabet reports robust earnings despite European Union fine

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The company had revenues of $32.7 billion for the quarter, which is up 26% year-over-year - extremely impressive for a company of this size.

Net profit dropped to $3.2 billion from $3.5 billion, due to the fine, but analysts focused on operating results.

Last week, European Union officials slapped a 4.34-billion-euro ($5 billion) penalty on the USA tech giant for illegally abusing the dominance of its operating system for mobile devices. Android has around 80 percent of the world's market share of smartphones, thanks to Google's model of letting companies use it free but packaging its own services in the heart of the system.

Alphabet's stock price is right now sitting at $1,255 apiece, up 3.6 per cent in after-hours trading. Company Chief Financial Officer Ruth Porat said the investments were necessary for the company to maintain an edge in machine learning and other future technologies. The headlining story of this release is that the market was surprised by Google acheiving far stronger ad sales than expected. Google plans to contest the ruling.

Google CEO Sundar Pichai said in a call with investors that the company now has 17 cloud regions, with three more on the way.

The tech titan's advertising business continues to be its bread and butter, with global ad sales topping out at $28 billion, up almost 25 percent year-over-year.

Revenue jumped to $32.66 billion from $26.01 billion.

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Alphabet is facing regulatory headwinds on both sides of the Atlantic as lawmakers grow increasingly concerned about its dominance of online advertising. Still, that was 23 per cent of ad revenue, down from 24 per cent in the first quarter of 2018.

A new privacy law enacted by the European Union in May led the company to revise user privacy disclosures and clamp down on how it shares data with advertising customers. And the company's investments in Cloud, Internet-connected Homes, and Autonomous Vehicles potentially set the company up for more years of premium growth & profits.

Google has more than 95 percent of share of search in Europe, according to the European Commission's complaint against the company.

Still, Alphabet's outlook remains tempered by cost concerns, Canaccord Genuity analyst Michael Graham said in a report this month.

Alphabet trails Facebook, Amazon and Twitter Inc in valuation as measured by the ratio of enterprise value to expected earnings.

Cost increases have come across the enterprise.

Which brings us, of course, to Google.