In the first couple of months following the coronavirus, Alphabet (GOOG  ) was the laggard among the FANG stocks. This was primarily due to a large chunk of the company's advertising revenues coming from travel-related sectors and small businesses which were most negatively affected by the pandemic. In Q3, Google actually had its first year-over-year decline in revenue due to this factor.

However, over the last couple of months, Alphabet has been the best-performing 'FANG' stock as investors position themselves for a huge recovery in travel and small businesses as the economy reopens in the second half of the year. Google's shares finished 8% higher to close at a new, all-time high following this earnings report.

Inside the Numbers

In Q4, Google had earnings per share of $22.30 versus expectations of $15.90. Revenue also topped expectations at $56.9 billion vs $53.1 billion expected for a 23% gain, marking an acceleration from 17% last year. For the first time, Google gave specific financials about Google Cloud which came in at $3.83 billion, a 47% gain from last year. The unit had a net loss of $1.2 billion in the quarter and a full-year loss of $5.6 billion.

YouTube revenue was the standout with $6.9 billion in revenue which was a 47% increase from 2019's Q4. In its conference call, the company said that YouTube now reaches more 18-49-year-olds than all TV networks combined with more than 100 million people streaming YouTube from their TV sets.

Stock Price Outlook

Google is now up more than 100% since its March 2020 low. Despite these recent gains, the stock remains reasonably valued especially in light of the recent acceleration in growth. The company has a forward price to earnings ratio of 33 which is slightly higher than the S&P 500's (SPY  ). However, analysts are looking for a 29% increase in revenue, while the S&P 500's revenue growth is expected to be flat. Further, Google has 20% profit margins, while the average for the S&P 500 is in the mid-single digits.

Further, the company's legacy search business continues to steadily grow and remains entrenched, but it also has two fast-growing businesses with Google Cloud and YouTube. In addition, its self-driving unit, Waymo, has started testing autonomous taxis in Arizona which is another potentially huge market that the company could win. On top of these, Google will also benefit from the economy normalizing and rebounds in travel and small businesses.