Google parent company Alphabet (GOOGL) released its fourth quarter earnings and revenue, exceeding consensus estimates. However, GOOGL stock saw a decrease as the primary advertising business slightly missed projections and concerns about the impact of generative artificial intelligence on internet search arose.
The tech giant’s reported earnings for the quarter ending Dec. 31 increased by 56% to $1.64 per share. Google reports earnings according to generally accepted accounting principles (GAAP).
During Q4, Google’s gross revenue rose by 13% to $86.31 billion, surpassing expectations. Cloud computing revenue growth re-accelerated and also exceeded estimates. Analysts surveyed by FactSet had estimated an EPS of $1.60 on revenue of $85.25 billion.
Additionally, Google’s Q4 advertising revenue grew by 11% to $65.52 billion, slightly below the estimated $65.82 billion. Concerns have been raised about how the emergence of generative artificial intelligence and Microsoft’s alliance with startup Open AI could alter the way major brands purchase digital advertising.
RBC Capital analyst Brad Erickson expressed concerns, stating that the guidance for Google’s capital spending in 2024 was significantly higher than anticipated. He mentioned, “Capex guide like whoa,” and added that “To us, (this) gives off the impression that gen AI’s capital intensity is catching management a bit off-guard.”
The company’s cloud-computing revenue increased by 25% to $9.19 billion, surpassing the estimated $8.94 billion. YouTube ad revenue rose by 15% to $9.2 billion, in line with estimates.
Following the earnings report, GOOGL stock declined by 5.6% in early trading, settling near 143. Evercore ISI analyst Mark Mahaney commented that “this is a fundamentally stronger quarter,” yet suggested that the stock price reaction reflected heightened expectations that were not met.
Alphabet repurchased $16.2 billion of its own stock in Q4. Additionally, Google’s Q4 traffic acquisition costs rose by 8% to $13.98 billion, with internet search-related payments to Apple (AAPL) remaining a significant issue in the Department of Justice’s antitrust lawsuit against Alphabet.
Following a sell-off after its September quarter 2023 results, Google stock rebounded. As of the earnings report, Alphabet shares had increased by 9% in 2024.
GOOGL stock holds a Relative Strength Rating of 89 out of a best-possible 99, according to IBD Stock Checkup.
Google stock is currently extended and trades above a buy zone.
For updates on artificial intelligence, cybersecurity, and cloud computing, follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech.
