Alphabet shares are plummeting after the company failed to meet Google ad revenue expectations

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

The stock fell more than 5% in early trading Wednesday, part of a broad decline for the tech-heavy Nasdaq (^IXIC).

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 developing artificial intelligence. Google Cloud revenue exceeded expectations, exceeding $9 billion and up 26% 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 noted that…

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