Alphabet stock drops as Q4 revenue misses expectations

Alphabet’s stock dropped after the tech giant posted Q4 revenue that fell short of Wall Street’s expectations, showing its growth continuing to slow.

Another big surprise was Alphabet CEO Sundar Pichai saying the company expects to spend a whopping $75 billion on capital expenditures in 2025, sharply higher than the consensus estimate of $57.9 billion. That continues a trend of the biggest tech companies pouring buckets of money into capex.

Shares were down 7.1% after-hours and fell as much as 8% right after the report.

For the quarter, Alphabet posted a whopping $96.5 billion in revenue, a 12% increase year over year. But analysts were expecting revenue of $96.7 billion.

Net income increased 28% year over year to $26.5 billion. EPS came in at $2.15, slightly edging out analysts’ expectations of $2.14.

For FY 2024, Alphabet’s revenue grew 14% year over year to $350 billion

Let’s break down the results for Alphabet’s many divisions:

• 📺 YouTube’s Q4 ad revenue grew 13.8% to $10.5 billion.

• ☁️ Google Cloud revenue for Q4 was $12 billion, up 30% year over year, driven by growth in generative AI.

• 🔎 Google’s search business brought in $54 billion, up 12.5%.

• 💰 Google advertising revenue was $72.4 billion, a 10.6% increase year over year.

In the earnings release, Pichai said:

“Our results show the power of our differentiated full-stack approach to AI innovation and the continued strength of our core businesses. We are confident about the opportunities ahead, and to accelerate our progress, we expect to invest approximately $75 billion in capital expenditures in 2025.”