Goldman: Investors Misread Google and Amazon Earnings

Goldman Sachs analysts wrote that investors misread Alphabet’s and Amazon’s most recent quarterly results, saying market moves placed too much weight on headline figures, one-off accounting items and timing effects instead of core business trends.

The research note followed the companies’ latest earnings reports. For Alphabet, Goldman pointed to seasonal advertising demand, currency-translation effects and the timing of certain ad products as drivers of the apparent slowdown, while noting continued growth in core search activity and cloud revenue.

On Amazon, Goldman highlighted margin swings tied to the timing of promotions, logistics expense and capital allocations. The bank said those short-term factors masked ongoing expansion in Amazon Web Services and the company’s advertising business.

Goldman recommended that investors look beyond headline revenue and earnings per share. The analysts identified ad engagement, cloud customer additions, fulfillment costs, order growth and Prime engagement as metrics that better reflect business momentum.

The note said comparisons with an unusually strong year-ago period and aggregated expense categories made recent results appear weaker. Goldman also noted that stock-based compensation and restructuring charges can reduce reported margins in ways that are separable from operating performance.

The research included the line ‘Market reaction appears disconnected from the firms' operating momentum.' Goldman urged separating timing-related items from core performance measures and examining unit economics, cloud and ad engagement metrics and the sequencing of large investments.

Investor scrutiny of big tech earnings has increased, where small misses or timing differences can cause large stock moves. Goldman presented its analysis as an argument for focusing on multi-quarter indicators rather than single-quarter swings.