Alphabet’s ad revenue fails to meet expectations, causing stock to drop

Google’s parent company, Alphabet (GOOG, GOOGL), announced its fourth quarter earnings after the market closed on Tuesday and disappointed analysts with its ad revenue, which is the core of the tech giant’s business. As a result, the company’s stock fell by 4% in extended trading. The revenue, excluding traffic acquisition costs for the third quarter, was $72 billion, which was slightly higher than the expected nearly $71 billion. However, investors were more focused on the missed advertising revenue. The company did report growth in its cloud business, which has become increasingly important to investors due to its role in AI development. Google Cloud revenue exceeded expectations, reaching over $9 billion, representing a growth of more than 20% from the previous year. Here are some of Alphabet’s key metrics for the fiscal fourth quarter compared to the expectations of Wall Street, based on data from Bloomberg: Revenue, excluding traffic acquisition costs: $72.32 billion vs. $70.97 billion expected Adjusted earnings per share: $1.64 vs. $1.59 expected Cloud revenue: $9.19 billion vs. $8.95 billion expected Ad revenue: $65.5 billion vs. $65.8 billion expected “We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud,” said Google CEO Sundar Pichai in the company’s earnings release. “Each of these is already benefiting from our AI investments and innovation.” The earnings report comes after Google recently laid off hundreds of employees across various divisions as part of its efforts to reduce costs and focus on growth areas, including AI. Last year, Google was seen as lagging behind Microsoft, which was one of the first companies in the tech industry to capitalize on the excitement surrounding consumer AI chatbots. Microsoft invested in OpenAI, the company behind the popular chatbot ChatGPT. Google has been striving to increase its market share in the cloud computing sector, where it currently ranks third, trailing behind Amazon and Microsoft.

Author: OpenAI