Alphabet shares drop as cloud revenue comes in short
The Google owner reported 11% revenue growth in the third quarter, as a rebound in advertising pushed expansion into double digits for the first time in over a year.
Cloud revenue came in below estimates at $8.41 billion, missing the mark by more than $20 million. However overall earnings and revenue beat with YouTube ad income climbing. Traffic acquisition costs rose more than expected, which was another drag on share performance.
(AI Video Transcript)Alphabet
Alphabet the company that owns Google, had a really good quarter. They saw an 11% increase in revenue, which is the amount of money they made, driven by more advertising. This is exciting because it's the first time in over a year that their growth has been in the double digits. Even though the results were positive, the company's shares, or the parts of the company that people can buy, went down by 5%.
Alphabet's share price
Alphabet made more money for each share of their company than people expected. For every share, they made $1.55, which was higher than the amount people thought they would make. They also made more money overall. Their total revenue was $76.7 billion, which was more than everyone thought it would be.
Artificial intelligence
Alphabet has been investing a lot in artificial intelligence (AI), which means using computers to do smart things. This investment has been paying off because they're getting good results. However, the stock market didn't like the news that their cloud revenue, which is the money they make from storing and analyzing data for other companies, was not as high as people expected. The market was expecting them to make over $20 billion, but they only made $8.41 billion.
Investment into Amazon and Microsoft
But, on the positive side, they made more money from advertising on YouTube than people were expecting. They made $7.95 billion instead of the estimated $7.8 billion. Even though their numbers were good, the price of Alphabet's shares has been going down. On the last day, the shares closed at a price of $131.79, and they've been going down in each session. Alphabet has been investing a lot in their cloud business to compete with companies like Amazon and Microsoft. They want to be leaders in providing computer services over the internet. The cloud business is important because more people are using advanced AI and need lots of computer power to run their programs.
Because of all this, people think that Alphabet's shares will start lower when they start trading again. But, despite all the ups and downs, the video talks about the good parts of Alphabet's performance and asks people to like and subscribe.
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