Alphabet's (GOOG, Financial) (GOOGL, Financial) core Google revenues grew +9% during the quarter, a meaningful acceleration from the -8% decline during the COVID-19-impacted second quarter. The Google unit also unexpectedly showed some modest expense leverage after several quarters of heavy reinvestment, driving double-digit earnings growth at Alphabet. We would not be surprised if that leverage is short-lived. However, Alphabet continues to meaningfully under-earn relative to its potential, and we welcome any effort that brings forward, or at least highlights, the Company's pent-up earnings power. On the latter score, Alphabet announced it will be providing more detailed operating segment profit data in the coming year.
From David Rolfe (Trades, Portfolio)'s Wedgewood Funds fourth-quarter 2020 shareholder letter.
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