Google Parent Alphabet Reports Q4 Earnings, Cloud Revenue Disappoints
Earnings
In its fourth-quarter earnings report, Alphabet (GOOGL) surpassed analysts' estimates for earnings per share, posting $2.15 compared to the expected $2.13. However, the company's revenue of $96.4 billion slightly missed the consensus estimate of $96.6 billion.
Cloud Segment
A key disappointment for the quarter was Google Cloud's revenue performance. Falling short of Wall Street's expectations, Google Cloud generated $11.9 billion in revenue, below the estimated $12.1 billion.
Advertising Revenue
Alphabet's advertising revenue exhibited strength, reaching $72.4 billion and surpassing the forecasted $71.7 billion.
Capital Expenditures
The company expanded its capital expenditures significantly for 2023, from $57.9 billion to a projected $75 billion.
Regulatory Concerns
Alphabet faces ongoing regulatory challenges. In China, antitrust authorities have launched an investigation into Google. Additionally, the company is appealing a ruling finding it abused its monopoly in the search market.
Competition
Rival Microsoft (MSFT) reported strong cloud growth of 21% year-over-year, with its cloud revenue rising to $40 billion. However, Microsoft's performance still fell short of analysts' expectations of $41.1 billion.
Outlook
Alphabet continues to invest heavily in AI, seeking to enhance ad sales and user engagement. The company's market share has outperformed Amazon (AMZN) and Microsoft over the past year, with Alphabet shares gaining 41%.
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