A Good Day To Be Google

Another earnings report this week, and another victory march to go with it.

After Amazon and Facebook stepped up to the plate to deliver some powerful shots to left field, Google hit with the last entry into this week’s earnings home run derby. Alphabet, Google’s parent, reported quarterly profits up 24 percent.

The growth was driven, unsurprisingly, by more ads being bought on the search engine, and users who are clicking those ads more and more often. Revenue, fueled by Google’s advertising business, rose 21 percent to $21.5 billion in the second quarter from a year ago, beating analysts’ average estimate of $20.76 billion.

“The strength of the quarter is about mobile,” Google Chief Executive Sundar Pichai said Thursday. “Our investment in mobile now underlines everything that we do today, from search and YouTube to Android and advertising.”

The stock shot up, with a 4 percent overnight bounce, offsetting a 1.6 percent stock slide leading into earnings.

“The big overhang of concern on Wall Street was that Google’s best days are behind it and that search is a dramatically maturing business. I think they just proved that’s not the case,” said Mark Mahaney, an analyst with RBC Capital Markets. The shift to mobile phones has revitalized Google’s business, he said. “More smartphones means more use of Google, and YouTube, too.”

Google still unquestionably leads the world digital ad market, with about 31 precent of the $187 billion total, but Facebook is gaining ground fast, now at 12 percent, up from 8.6 percent a year ago. Facebook’s market share has risen to 12 percent from 8.6 percent in 2014, according to research firm eMarketer. As of last year more than half of Google’s searches flowed from mobile, and some analysts are now estimating over half of its revenue comes that way as well.

There are, however, some concerns, like a decline in the average price per click advertisers are paying Google, since mobile ads are generally less expensive than their desktop counterparts. But the tide on that discount pricing may be going out; there are signs that buyers are bidding up the price of mobile ad, and Google noted that advertisers’ cost per click was down 7 percent this year as opposed to 9 percent at the same time last year.

What is undeniably true is that Google’s best days are not behind them — though they may have some more competitive days with Facebook coming soon.