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Google parent company Alphabet (GOOG, GOOGL) reported its fourth quarter earnings after the bell on Tuesday, missing analysts’ expectations on ad revenue, the heart of the tech giant’s business.
The stock slid 4% lower in extended trading.
Revenue, excluding traffic acquisition costs for the third quarter, was $72 billion versus expectations of nearly $71 billion. That’s higher than the $63.12 billion the company generated during the same period in the prior year. But investors seemed to focus on the advertising miss.
The company reported continued growth in its cloud business, which has grown in importance to investors because of its usefulness in the development of AI. Google Cloud revenue beat expectations, crossing $9 billion, amounting to more than 20% growth from a year ago.
Here are some of Alphabet’s most significant metrics compared to what Wall Street was expecting in the company’s fiscal fourth quarter, according to data from Bloomberg:
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Revenue, excluding traffic acquisition costs: $72.32 billion vs. $70.97 billion expected ($63.12 billion in Q4 2022)
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Adjusted earnings per share: $1.64 vs. $1.59 expected ($1.05 in Q4 2022)
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Cloud revenue: $9.19 billion vs. $8.95 billion expected ($7.32 billion in Q4 2022)
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Ad revenue: $65.5 billion vs. $65.8 billion expected ($59.04 billion in Q4 2022)
“We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud,” said Google CEO Sundar Pichai in the company’s earnings release. “Each of these is already benefiting from our AI investments and innovation.”
The earnings report arrives just weeks after Google laid off hundreds of workers across multiple divisions as the company aims to cut expenses and focus on growth areas, including AI. The tech giant joins several of its peers and others across corporate America that have relied on layoffs to boost efficiency in the wake of significant expansions in the COVID era.
Last year, Google was widely seen as playing catch up to Microsoft (MSFT), which was among the first in the tech world to reap the cultural excitement around consumer AI chatbots. Microsoft invested in OpenAI, the company behind the popular chatbot ChatGPT.
The company has been pushing to claim additional market share in the cloud computing market, where it currently sits in third place, behind West Coast competitors Amazon (AMZN) and Microsoft.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.
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