Google (GOOGL  ) opened 4% higher following a very strong earnings report in which the company topped earnings and revenue estimates by a significant margin. It's an indication that the economy is recovering, and businesses are increasing their spending on online advertising. The company also introduced a new $50 billion share buyback which should see about 4% of the company's float being retired.

Inside the Numbers

In Q1, Google generated $26.29 in earnings per share, while analysts had a consensus forecast of $15.82 per share. Revenue came in at $55.3 billion which topped the consensus forecast of $51.7 billion.

Ad revenue accounted for $44.7 billion of the company's revenue which is a significant increase from $33.8 billion last year. This represents the fastest growth in the last 4 years. Of course, one contributing factor is that last year's comps were low due to companies pulling back on online advertising amid the pandemic.

Breaking down the report by segment, Google Cloud revenue was $4.1 billion which slightly fell short of estimates. This was 46% growth from last year, although the unit lost $974 million as it continues to invest in growth.

However, Youtube Ads generated $6 billion in revenue topping the consensus of $5.7 billion. Notably, this was a 49% increase from last year, and the website saw an increase of usage from 73% of adults in 2019 to 81% in 2021.

The company's earnings were also helped by gains in some of its holdings of its venture arm. Some contributors were Stripe, UiPath (PATH  ), and Oscar Health (OSCR  ) with both of the latter going public, while Stripe is expected to IPO before the end of the year.

Stock Price Outlook

During the onset of the pandemic, Google was the worst-performing of the FANG stocks, given that a large share of its ad inventories are bought by small businesses and travel-related companies. While its competitors saw an acceleration in sales, earnings, and growth, Google posted its first-ever revenue decline.

However, now with the economy heating up and getting closer to normal, Google is the biggest beneficiary of these changes, in terms of its earnings growth and share price appreciation. Further, the company has some cyclical tendencies. If the forecasters are correct, and Q2 GDP will be around 6% with second-half GDP in the range of 8 to 10%, then Google's growth will certainly continue as businesses will be likely to be aggressively spending on online advertising.