Alphabet, the parent company of Google, released its fourth-quarter earnings, falling short of analysts’ ad revenue expectations. As a result, the company’s stock dropped by 4% in extended trading. The revenue, excluding traffic acquisition costs, for the quarter stood at $72 billion, surpassing the forecast of approximately $71 billion. It represents a significant increase from the $63.12 billion generated in the same period the previous year. Despite this growth, investors were concerned about the advertising miss. The company did, however, report continued 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 $9 billion, marking a 26% increase from a year ago. Alphabet has been striving to gain more market share in the cloud computing sector, currently placing third behind Amazon and Microsoft.
The following are some key metrics from Alphabet’s fiscal fourth quarter, compared to Wall Street’s expectations, according to Bloomberg data: 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.
During a call with analysts, CEO Sundar Pichai and CFO Ruth Porat emphasized the importance of streamlining the business to achieve cost savings and efficiency. Pichai highlighted the winding down of non-priority projects across different teams, aiming to facilitate investment and operation in growth areas. Porat stated that the company is focused on reducing organizational layers to enhance efficiency, resulting in a slower pace of hiring, while continuing to invest in top talent.
The earnings report comes shortly after Google’s layoffs across multiple divisions as part of its efforts to trim expenses and focus on growth areas, particularly AI. The company, alongside its peers in the corporate sector, has turned to layoffs to improve efficiency following significant expansions during the COVID era. Google’s executives also addressed concerns about the potential disruption of its search products by the advancement of AI, particularly in light of generative AI chatbots altering the way people interact with the web. Pichai emphasized that AI tools enhance Google’s capabilities, providing users with a variety of sources and information. Google has been working to catch up with Microsoft, an early adopter of consumer AI chatbots, and has made various efforts to enhance its search tools and offer new language models, such as Gemini.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.Click here for the latest stock market news and in-depth analysis, including events that move stocksRead the latest financial and business news from Yahoo Finance
