Google parent Alphabet Q4 results: shares down after earnings revenue beats estimates

Alphabet shares are down despite beating earnings revenue estimates.

Google logo after Alphabet Q4 results Source: Bloomberg

Google parent Alphabet stock is down despite Alphabet's Q4 earnings beating Wall Street projections.

Alphabet earnings: key figures

Earnings per share (EPS) $12.77
Advertising Revenue $32.6 billion
Other Bets (other Alphabet companies) $6.49 billion
Other revenues $154 million

Alphabet earnings

Alphabet's Q4 earnings were $12.77,exceeding the $10.82 expected from financial experts. Alphabet's Q4 advertising revenue was $32.6 billion, a growth of 20%. Alphabet's overall revenue was $39.28 billion, less than the projected $38.93 billion.

Traffic acquisition costs, the fees Google charges companies to be the top search engine, topped $7.64 billion. Alphabet's results in that division were higher than the $7.62 billion Wall Street projected. Costs-per-clicks on Google properties, the amount the search engine charges advertises, plummeted by 9% from last quarter.

In addition to Google’s search income, Alphabet’s earnings in other areas beat the predictions of financial experts. Alphabet’s ‘other bets’, the other companies owned by Google’s parent, earned $6.49 billion. That figure barely beat the estimate of $6.43 billion.

While Alphabet had a mostly positive earnings report, there were misses for the tech company. Alphabet’s Q4 results in ‘other revenues’ like the Google Play store and hardware sales, underperformed and brought in $154 million. Wall Street was expecting $184 million. Alphabet's Q4 earnings also came at a higher cost than expected. The corporation reported $7 billion in expenditures, more than the projected $5.63 billion.

What do Alphabet's Q4 results mean for their share price?

Alphabet’s share price may decrease as a result of its latest earnings report. The stock has fallen in US after hours trading after revealing that it spent more than expected on its hardware division of Pixel smartphones and cloud technology. The current share price of $1,095 could drop if investors continue to be disappointed by Google’s increased expenditures. Alphabet’s profits were thinner because of its investment in cloud services. Chief financial officer (CFO), Ruth Porat, said that the capital expenditure (capex) will help Alphabet’s growth.

‘Capex is growing at a sizable clip and the primary driver continues to be investing in technical infrastructure to support growth.By that we mean data centers and machines. This reflects our outlook for global growth in ads, search, YouTube and cloud,’ said Porat.

How do Alphabet's Q4 results compare to other tech stocks?

Alphabet’s Q4 earnings are positive similar to other tech stocks, like Apple and Amazon. The tech stocks have also beat earnings estimates, but also their stocks dropped as their expenses were greater than expected.

What’s next for Google after Alphabet’s Q4 results?

While Alphabet didn’t provide a dividend forecast, Porat noted that there could be a pivotal acquisition in the future to bolster its booming cloud business that increased by 31%.

‘Acquisitions are an attractive complement to what we do to drive organic growth. We did more last year than prior, but they were small. We are very open to acquisitions,’ said Porat.

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