Google Stock Falters As Earnings Report Reveals Weaker-Than-Expected Cloud Sales

Topline

Shares of Google parent Alphabet sank in after hours trading Tuesday after the search engine giant’s fourth-quarter earnings report revealed slightly weaker quarterly revenues than Wall Street anticipated and predicted much higher spending in 2025 than expected.

Key Facts

Alphabet stock declined 7% to $193 in afternoon trading by 4:35 p.m. EST, equating to a roughly $180 billion loss of market value.

The dive came after Alphabet reported mixed Q4 earnings: Its $2.15 adjusted earnings per share exceeded consensus analyst forecasts of $2.12, while its $96.5 billion in revenue fell just short of estimates of $96.7 billion.

Perhaps most pressing for investors was the company reporting worse-than-expected revenue in its artificial intelligence heavy Google Cloud unit, bringing in $11.96 billion compared to forecasts of $12.19 billion, and guiding for $75 billion in 2025 capital expenditures, far above estimates of $58.8 billion.

Alphabet shares had closed normal trading up 2.5% at a record share price of $207.71.

Big Number

$72.46 billion. That’s how much advertising revenue Alphabet brought in during 2024’s final three months, easily topping forecasts of $71.66 billion and shattering Q3 2024’s prior record of $65.85 billion.

Key Background

Alphabet is an ad company at its core, with ads accounting for 75% of sales last quarter, including $54 billion from Google and $10 billion from its YouTube video platform. Google is a part of the generative AI arms race with its Gemini chatbot, and joins fellow Silicon Valley generative AI player Meta in forecasting much higher 2025 spending than Wall Street expected.