Alphabet (GOOGL) Stock Tanks After Disappointing Q4 Earnings

Key Points:

* GOOGL shares plunged 8% in pre-market trading after missing Q4 revenue expectations.
* Cloud services and capital expenditure concerns overshadowed strong growth in search and YouTube ad revenue.
* Analysts downgrade estimates and reiterate concerns over cloud deceleration and high capex guidance.

CFO's Comments:

CFO Anat Ashkenazi attributed the revenue miss to capacity constraints in cloud services, despite high demand. However, investors remain skeptical.

Analyst Commentary:

DA Davidson
* Maintains Neutral rating and $200 price target.
* Cites disappointing revenue performance and decelerating Google Cloud growth.
* Notes benefits from AI integration but concerns about capacity issues in cloud business.

Pivotal Research Group
* Reiterates Buy rating and $225 price target.
* Acknowledges mixed results with strong search and YouTube revenue but weak cloud performance.
* Expresses concern over slower-than-expected cloud growth and elevated capex guidance.
* Remains optimistic about long-term upside from cloud adoption and AI development.

JP Morgan
* Maintains Overweight rating but lowers price target from $232 to $220.
* Raises concerns about 2025 capex, cloud revenue trajectory, and margin expansion potential.
* Questions Google's ability to sustain margin expansion amid slower revenue growth and increasing depreciation.

Conclusion:

Analysts remain cautious on Alphabet's outlook after a disappointing Q4 report. Concerns over cloud deceleration, high capex guidance, and potential margin pressure have weighed on investor sentiment.