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Google (GOOG) shares are soaring 60 points in after-hours trading after the company beat estimates on both the top and bottom lines, so I figured I would weigh in briefly. Bears on the stock have been insisting that the weak domestic economy was going to severely impact Google's results, but this view ignored two very important points.

First, Google's core market (online advertising) is not completely dependent on the economy. If the online ad market was mature already, then the bears would have been right. However, online advertising is still growing very quickly as a percentage of the overall advertising market. As a result, lower overall ad spending can actually occur simultaneously with growing online advertising, which is what Google is benefiting from. When you are taking market share, as Google is, those gains can offset much of the decline in corporate discretionary spending.

Second, Google gets 51% of its revenue from overseas. This helps the company in two ways; exposure to growing international markets, coupled with currency gains due to the weak dollar. In fact, we just saw great first quarter numbers from IBM (IBM), due in part to its very strong presence overseas.

Now, I am not saying Google is completely immune to a slowdown in the United States, that would be naive. However, when you get half of your sales outside the United States and you are taking market share domestically as well, the impact from a weak U.S. economy is not as dramatic as many would have you believe. And this is not only a Google phenomenon, it is a factor behind many of the strong earnings reports we have seen so far this quarter. Investors should keep these things in mind.

Full Disclosure: Long shares of Google at the time of writing.
Source: 2 Major Reasons Why Google Bears Were Wrong This Quarter