Alphabet misses Google’s advertising revenue expectations, 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 a 26% increase from a year ago. The company has been pushing to claim additional market share in the cloud computing market, where it currently ranks third behind competitors Amazon (AMZN) and Microsoft (MSFT).

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)

During a call with analysts, both CEO Sundar Pichai and CFO Ruth Porat highlighted the importance of streamlining the business to achieve cost savings and efficiencies.

“We stopped with several teams…

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