Alphabet Reports Q4 Earnings, But Cloud Revenue Misses Expectations
Alphabet, the parent company of Google, reported its fourth quarter earnings after the market close on Tuesday. The company beat analysts' estimates for earnings per share but missed on revenue expectations.
Earnings and Revenue
Alphabet reported earnings per share (EPS) of $2.15 on revenue of $96.4 billion. Analysts had expected EPS of $2.13 and revenue of $96.6 billion.
Advertising and Cloud Revenue
Advertising revenue was $72.4 billion, compared to analysts' expectations of $71.7 billion. However, Google Cloud revenue fell short of expectations, coming in at $11.9 billion compared to the $12.1 billion anticipated by Wall Street.
Capital Expenditures and Antitrust Probe
Alphabet also announced plans to increase its capital expenditures from $57.9 billion to $75 billion in the coming year. Additionally, the company is facing an antitrust probe by China, which is seen as retaliation for President Trump's tariffs on Chinese goods.
AI and Meta
Alphabet and Meta (META) are both investing heavily in artificial intelligence (AI) to improve ad sales and user engagement. Meta reported strong earnings last week, but declined to provide full-year guidance.
Comparison to Competitors
Microsoft's cloud revenue grew by 21% year-over-year in its recent quarter, but still missed Wall Street expectations. Amazon's cloud revenue has been steadily growing and remains a key driver of its business.
Regulatory Risks
Google is still facing regulatory risks related to its antitrust case. The market has largely shrugged off immediate concerns, but the company's shares could be impacted if the case progresses.
Outlook
Alphabet is continuing to face challenges in its cloud business, but its strong advertising revenue and investments in AI position it well for long-term growth. Investors should keep an eye on the antitrust probe and other regulatory developments that could impact the company's performance.