Alphabet Stock Declines Despite Beating Earnings Expectations (Report: Barron’s)

Alphabet’s Stock Falls Despite Strong Q4 Results: Alphabet’s Q4 revenue exceeded expectations, with Google Cloud’s revenue reaching $9.2 billion and overall advertising at $65.5 billion. Despite positive growth, the stock fell by 5.9% in after-hours trading following the earnings report.

Alphabet Stock Declines Despite Beating Earnings Expectations

According to Barrons: Alphabet’s stock experienced a decline in after-hours trading on Tuesday, despite the search giant reporting better-than-expected fourth-quarter results. You will be shocked to know about Dark Side IPO: Can anyone get harmed by doing this?

The Google-parent company announced a revenue of $86.3 billion for the December quarter, reflecting a 13% increase from the previous year and surpassing the Wall Street consensus forecast of $85.3 billion. Earnings per share were reported at $1.64, exceeding the consensus of $1.59 per share.

The revenue for Google Cloud stood at $9.2 billion, marking a 26% increase and surpassing analysts’ estimates of $8.9 billion. Overall, Google advertising reached $65.5 billion, slightly below Street estimates. YouTube advertising generated $9.2 billion in revenue, marking a 16% increase and meeting estimates. Revenue from Google Search and other advertising amounted to $48.02 billion, slightly lower than the Street consensus of $48.1 billion and reflecting a 13% increase.

“Google Network” ads, which are displayed on various websites and apps, were also slightly below estimates at $8.3 billion, representing a 2% decrease from the year-ago quarter.

While the company experienced a loss of $863 million in the quarter from its “other bets” portfolio, it reported an operating income of $864 million from Google Cloud, a significant turnaround from the $186 million loss in the year-ago period.

Alphabet highlighted that its capital expenditures in the quarter amounted to $11 billion, up from $8 billion in the previous quarter, as the company continues to invest in AI and cloud infrastructure. Additionally, the company mentioned an anticipated substantial increase in capital spending in 2024 compared to 2023.

Sundar Pichai, the CEO of Alphabet, expressed satisfaction with the ongoing strength in Search and the growing contribution from YouTube and Cloud, highlighting the benefits derived from AI investments and innovation. He added, “As we enter the Gemini era, the best is yet to come.”

Analyzing the results, Evercore ISI analyst Mark Mahaney noted that the top-line beat was attributed to the “Google Other” category, encompassing subscriptions, platforms, and devices. He suggested that the segment received a boost from the company’s NFL Sunday Ticket football subscription service. Despite acknowledging the overall strength in various revenue streams, Mahaney recognized that the market’s reaction may have been influenced by heightened expectations that were not met.

Alphabet’s stock experienced a 5.9% decline in late trading following the earnings report.