Shares of Alphabet Inc, Google's parent company, fell late Tuesday, as a rebound in digital advertising fell short of analysts' high expectations.
Search engine power reported a jump Fourth quarter sales, mainly through advertising, but Alphabet GOOGL shares,
Google,
It fell about 6% in after-hours trading.
Total revenue was $86.3 billion, up 13% from $76 billion last year. Sales minus total acquisition costs (TAC) were $72.3 billion, compared to $63.1 billion a year ago.
Alphabet reported fourth-quarter net income of $20.7 billion, or $1.64 per share, compared to net income of $13.6 billion, or $1.05 per share, in the same quarter last year.
“We are thrilled by the continued strength in search and the growing contribution from YouTube and Cloud. Each of these is already benefiting from our investments and innovations in AI. As we enter the Gemini Era, the best “He hasn't arrived yet.”
Analysts surveyed by FactSet were on average expecting net earnings of $1.59 per share on revenue of $85.3 billion and ex-TAC revenue of $71.2 billion.
Total Google ad sales rose 11% to $65.5 billion from $59 billion a year ago, slightly below analysts' average forecast of $65.8 billion. YouTube ad sales rose 16% to $9.2 billion from $7.96 billion a year ago. Google Cloud had sales of $9.2 billion, up 26% from $7.3 billion.
“Alphabet's disappointing advertising revenue numbers suggest that companies around the world remain uncertain about the pace of interest rate cuts from global central banks, thus keeping some powder dry while waiting for more evidence before opening their wallets,” says Tomas Monteiro. , chief analyst at Alphabet Bank. Investing.com, he said in an email.
Alphabet is also ramping up AI initiatives to improve operational efficiency and productivity for 2023 and beyond. The company uses AI in its financial regulation and analytics, but Alphabet did not report AI revenue in its earnings report Tuesday.
Pichai said that generative AI will be integrated into the research, during a call with analysts taking place now. Philip Schindler, Google's chief business officer, said the AI tools would be designed to boost ad sales over the long term in a “new search experience,” but he did not provide a timeline.
During the call, Ruth Porat, Alphabet's chief financial officer, said the company has slowed its hiring process as it continues to “re-engineer its cost base” and emphasize “organizational efficiency.” Alphabet has announced more than 1,000 job cuts in recent weeks.
Google shares are up 53% over the past 12 months. The S&P 500 SPX is up 21% in the past year.
