What's going on?

Alphabet�s ad business basically sells itself these days: the Google parent reported better-than-expected quarterly earnings late on Tuesday, and its stock initially rose 4% (tweet this).

What does this mean?

Businesses were quick to slash their ad budgets to save cash when the pandemic landed last year, but they reverted to old habits almost as quickly once the global economy started finding its feet. That set the bar high for Alphabet, whose ad business represents 30% of the US�s digital advertising spend � not to mention the majority of the tech giant�s income. But the company comfortably soared past expectations: its first-quarter revenue came in 7% higher than analysts� forecasts, and its profit 66% higher.

Why should I care?

The bigger picture: What goes up might come down.

Google sits alongside Facebook and Amazon as one of the big three digital advertisers, which collectively increased their share of the US digital ad market from 80% in 2019 to almost 90% last year, according to research firm GroupM. That�s drawing unwanted attention from US regulators, which are gunning to spin off the business segments of this so-called �triopoly� into separate companies � in turn limiting their influence over the global digital ad market.

For markets: Alphabet�s still shooting for the moon.

Alphabet is made up of a core money-making platform � Google � and a mishmash of high-risk, high-reward moonshot projects. And that whole �money-making� thing might be why plenty of investors value the company based on Google�s earnings alone. But some longer-term investors reckon those moonshot projects � self-driving vehicle company Waymo, AI firm DeepMind, and life sciences division Verily � are going underappreciated, and their potential unreflected in Alphabet�s share price. By exactly how much remains to be seen, but according to our math, those companies could be worth north of $100 billion�