Alphabet Q4 Revenue Miss Triggers Stock Plunge
Earnings
* Alphabet (GOOGL) reported fourth-quarter revenue below expectations.
* Key culprits:
* Softer cloud services sales (similar to Microsoft's)
* Deceleration in business from Q3
* Search business saw 13% growth.
* YouTube ad sales rose 13.8%.
Analyst Commentary
* DA Davidson
* Neutral rating and $200 price target reiterated.
* Positive on AI integration but concerned about cloud growth.
* Pivotal Research Group
* Buy rating and $225 price target reiterated.
* Positive on search and YouTube results but concerned about cloud deceleration.
* Attributes deceleration to data center capacity constraints.
* JP Morgan
* Overweight rating reiterated but price target lowered from $232 to $220.
* Concerns include:
* 2025 capital expenditure of $75 billion
* Cloud revenue trajectory
* Cost and margin expansion potential
* Notes that Google is "capacity constrained" in cloud but skeptical about margin expansion potential given slower revenue growth and accelerated depreciation.