Google's Q3 2022 was a double-miss on both the top- and bottom-lines. Yet, its core underlying business in advertising and cloud-computing remains strong.

FX was the biggest drag on Google's results, which was further corroborated by double-digit constant currency growth observed across its core segments, as previously expected.

We believe Google's Q3 2022 results demonstrate resilience, making the stock's latest knee-jerk pullback on the double-miss a compelling entry opportunity.

No company is immune to looming macroeconomic headwinds, yet Alphabet Inc.’s (NASDAQ: GOOG, NASDAQ: GOOGL) ("Google")Q3 2022 results have proven that it continues to be more resilient than most – especially its ad-focused peers that continue to reel from the double-whammy of macro-driven ad spending weakness and Apple’s (AAPL) signal loss. Despite the weight of FX headwinds which were largely expected given the rapid surge in the dollar in recent months and observed in the large gap between Google’s 6% y/y revenue growth and the 11% constant currency equivalent, the company continued to benefit from “growth in Search and momentum in Cloud.”

Google Search and YouTube advertising demand was a key focus area for many investors heading into its latest earnings release, as talks about softening ad spending have gained momentum in recent months. Markets have been bracing for a slowdown in consumer spending and an impending recession. Investors’ angst only worsened after advertising peer Snap Inc. (SNAP) reported the “worst revenue growth rate in its history,” elevating concerns over rising competition and broader macro headwinds. However, Google’s delivery of advertising sales growth in Q3 2022 (inclusive of FX headwind) suggests it continues to benefit as a market leader, as advertisers remain cautions on the allocation of ad dollars, favoring the best “value for money” ad distribution channels amid a looming economic downturn.

Google Cloud is another key spotlight for the company, as the segment maintains momentum by benefiting from the increasing adoption of a multi-cloud strategy across the commercial sector. The segment’s continued growth also contributes positively to its profitability trajectory – something that investors are hoping would come soon to match the lucrative margins achieved by rivals AWS (AMZN) and Azure (MSFT).