Alphabet, 'Below Expectations' Q4 Earnings... 6% Drop in After-Hours

Google's parent company Alphabet announced on the 4th (local time) that it recorded sales of $96.47 billion (140.2191 trillion KRW) and earnings per share of $2.15 (3,125 KRW) in the fourth quarter of last year.

AFP Yonhap News

Sales increased by 12% compared to the previous year, but were slightly below the Wall Street analysts' average estimate of $96.56 billion compiled by market research firm LSEG. Earnings per share exceeded the expected $2.13.

Gross profit rose more than 28% year-on-year to $26.54 billion. By segment, YouTube advertising revenue reached $10.47 billion, surpassing the expected $10.23 billion.

However, Google's core cloud revenue was recorded at $11.96 billion, falling short of the expected $12.19 billion. Cloud revenue grew 30% year-on-year but was lower than the 35% growth rate in the third quarter of last year and also below the Wall Street expected growth rate of 32.3%.

Although Google is heavily investing in cloud, it is still trailing Amazon Web Services (AWS) and Microsoft Azure.

Google advertising revenue, including search, increased by about 10% to $72.46 billion.

The market is concerned that Alphabet's sales fell short of expectations, indicating pressure from intensified competition in the digital advertising market and a slowdown in the cloud computing business.

Alphabet stated that it plans to invest more funds this year in areas such as artificial intelligence (AI). Sundar Pichai, Alphabet's CEO, said, "We are confident about future opportunities," and added, "We expect to invest about $7.5 billion in capital expenditures this year to accelerate our progress."

Alphabet's stock price closed up 2.5% in regular trading on the New York Stock Exchange that day but showed a decline of around 6% in after-hours trading following the earnings announcement.