Alphabet misses expectations on ad revenue, causing its stock to fall

Google parent company Alphabet (GOOG, GOOGL) reported its fourth-quarter earnings after the bell on Tuesday, missing analysts’ expectations for advertising revenue, the heart of the tech giant’s business.

The stock fell 4% lower in extended trading.

Revenue, excluding traffic acquisition costs for the third quarter, was $72 billion, compared to expectations of nearly $71 billion. That’s up from the $63.12 billion the company generated in the same period last year. But investors seemed to focus on the advertising miss.

The company reported continued growth in its cloud business, which has become increasingly important to investors due to its usefulness in AI development. Google Cloud revenue exceeded expectations and exceeded $9 billion, representing growth of more than 20% from a year ago.

Here are some of Alphabet’s key numbers compared to what Wall Street expected in the company’s fourth fiscal quarter, according to data from Bloomberg:

  • Revenue, excluding traffic acquisition costs: $72.32 billion versus $70.97 billion expected ($63.12 billion in Q4 2022)

  • Adjusted earnings per share: $1.64 vs. $1.59 expected ($1.05 in Q4 2022)

  • Cloud revenue: $9.19 billion vs. $8.95 billion expected ($7.32 billion in Q4 2022)

  • Advertising revenue: $65.5 billion vs. $65.8 billion expected ($59.04 billion in Q4 2022)

“We are pleased with the continued strength in Search and the growing contributions from YouTube and Cloud,” Google CEO Sundar Pichai said in the company’s earnings release. “Each of these is already benefiting from our AI investments and innovation.”

The earnings report comes just weeks after Google laid off hundreds of employees across multiple divisions as the company looks to cut…

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