GETTY IMAGES FOR DFB Google Stock Beats Expectations in Earnings, Yet Advertising Growth Falls Short Alphabet, the parent company of Googl...

 

GETTY IMAGES FOR DFB

Google Stock Beats Expectations in Earnings, Yet Advertising Growth Falls Short

Alphabet, the parent company of Google (GOOGL), announced its fourth-quarter earnings and revenue on Tuesday, surpassing consensus estimates. However, despite the cloud computing revenue growth exceeding expectations and accelerating, the core advertising business slightly fell short of projections, leading to a decline in GOOGL stock.

After the market closed, Google reported its earnings for the quarter ending December 31, showing a 56% increase to $1.64 per share. The tech company reports its earnings under generally accepted accounting principles (GAAP). In the fourth quarter, Google's gross revenue increased by 13% to $86.31 billion. Additionally, advertising revenue for Q4 grew by 11% to $65.52 billion, slightly below the estimated $65.82 billion. Analysts surveyed by FactSet had anticipated earnings per share (EPS) of $1.60 on revenue of $85.25 billion.

Google Stock: Cloud Growth Beats

Google reported that its cloud-computing revenue surged by 25% to $9.19 billion, surpassing estimates of $8.94 billion. This growth marks an improvement from the 22% increase seen in the September quarter. Additionally, YouTube ad revenue climbed by 15% to $9.2 billion, meeting expectations.

However, in after-hours trading, GOOGL stock dropped by 4.3%, nearing $145. Analyst Mark Mahaney from Evercore ISI noted that despite the overall strength of the quarter, with accelerated growth in gross revenue, search, YouTube, and cloud and Google other revenues, the market reaction reflects higher expectations that were not met.

During Q4, Google repurchased $16.2 billion of its own stock, compared to $15.78 billion in the September quarter.

GOOGL Stock Performance

Following a sell-off after its September quarter 2023 results, Google experienced a rebound. GOOGL stock dropped by 13% on Oct. 25, the day after the Q3 report, reaching a low of 121.46 on Oct. 27. However, Google stock then rallied by 26% over the subsequent three months leading up to today's Q4 Google earnings report.

Prior to the Google earnings report, Alphabet shares had seen a 9% increase in 2024. In 2023, Google stock surged by 58%, outperforming other major tech stocks such as Meta Platforms (META), Amazon.com (AMZN), and Netflix (NFLX).

GOOGL stock currently holds a Relative Strength Rating of 89 out of a possible 99, as per IBD Stock Checkup. However, Google stock is currently extended and trades above a buy zone.