Alphabet's Earnings Soup

Shares of Alphabet fell 2.3% in premarket trading on Tuesday after the parent of Google posted solid second-quarter sales and earnings but hinted that rising costs could slow profit margin improvements. Revenue in the quarter jumped 21% from a year earlier to $26.01 billion and beat Wall Street estimates of $25.6 billion, while earnings were $5.01 a share, firmly ahead of the projected estimate of $4.44. If a $2.7 billion fine that European Union regulators recently imposed over the integration of Google Shopping ads within search results, earnings were $8.90 a share, above consensus of $8.36.

The results, however, were overshadowed somewhat by the company's total traffic acquisition costs, which increased to $5.091 billion and now represent 22% of Google's advertising revenue.

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