Alphabet, the parent company of Google, suffered a share drop of almost eight percent in Wednesday morning trading following the release of its fourth-quarter financial results, which fell short of analysts’ revenue expectations.
CNBC reports that Alphabet, the parent company of Google, faced a significant setback as its shares plummeted by almost eight percent in morning trading. The company’s fourth-quarter financial results revealed a revenue miss, with Alphabet reporting $96.47 billion in revenue compared to the $96.56 billion expected by analysts.
Despite the revenue shortfall, Alphabet’s earnings per share managed to surpass analysts’ estimates by two cents, coming in at $2.15 versus the expected $2.13. However, this small victory was overshadowed by the company’s disappointing performance in key areas.
Google’s advertising revenue growth slowed to 10.6 percent year-over-year, a decrease from the 11 percent growth seen in the same quarter last year. Similarly, search revenue growth decelerated to 12.5 percent from 12.7 percent in the fourth quarter of the previous year. YouTube ads revenue growth also took a hit, dropping to 13.8 percent from 15.5 percent a year ago, while the company’s services business experienced a growth slowdown to 10.2 percent from 12.4 percent.
Alphabet’s cloud division, which has been a key focus for the company as it aims to compete with market leaders like Amazon Web Services and Microsoft Azure, also fell short of expectations. The unit reported revenue of $11.96 billion, missing Wall Street’s projected $12.19 billion. Despite this, the cloud division still managed to post a 30 percent year-over-year increase in revenue.
In a surprising move, Alphabet announced plans to invest heavily in its artificial intelligence strategy, with a projected $75 billion in capital expenditures for 2025. This figure significantly exceeds the $58.84 billion that Wall Street had anticipated, according to FactSet. The company’s fourth-quarter capital expenditure also came in higher than expected at $14 billion, surpassing the $13.26 billion predicted by analysts.
Chief Financial Officer Anat Ashkenazi addressed the increased capital expenditure during an earnings call with investors, attributing it primarily to investments in the company’s technical infrastructure. She highlighted that the largest component of this investment was in servers, followed by data centers, to support the growth of Alphabet’s various businesses, including Google Services, Google Cloud, and Google DeepMind.
Ashkenazi also acknowledged that the company’s cloud unit faced a tight supply-demand situation in the fourth quarter, with more demand for AI products than available capacity. She assured investors that Alphabet is working diligently to bring more capacity online throughout the year to meet this growing demand.
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
