Alphabet shares slide on disappointing Google ad revenue
Alphabet CEO Sundar Pichai walks to lunch at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 12, 2023.
David Paul Morris | Bloomberg | Getty Images
Alphabet shares slid more than 6% in extended trading on Tuesday after the company reported ad revenue that missed analysts’ estimates.
Here are the key numbers:
- Earnings per share: $1.64 vs. $1.59 expected by LSEG, formerly known as Refinitiv.
- Revenue: $86.31 billion vs. $85.33 billion expected by LSEG.
- Google Cloud: $9.19 billion vs. $8.94 billion expected, according to StreetAccount.
- YouTube ads: $9.2 billion vs. $9.21 billion expected, according to StreetAccount.
- Traffic acquisition costs: $13.9 billion vs. $14.1 billion, according to StreetAccount.
Alphabet reported its fastest quarter for revenue growth since early 2022, with sales climbing 13% from $76.05 billion a year earlier, the company said in a statement. However, ad revenue of $65.52 billion trailed analysts’ estimates of $65.94 billion, according to StreetAccount.
YouTube, which has been helping to drive accelerated growth, came in just shy of expectations.
The results, while generally above estimates, weren’t enough to satisfy investors, who pushed the stock to fresh highs last week. Facebook’s ad business is growing faster, and TikTok represents an ongoing competitive threat as younger users turn to the app to create short viral videos.
Google Cloud remains a growth engine, with 26% expansion in the fourth quarter compared to a year ago. The company is also drawing profit from the cloud business, which was losing money for years as it tried to keep up with Amazon Web Services and Microsoft Azure. Operating income in the fourth quarter was $864 million, following a year-ago loss of $186 million.
Across Alphabet, CEO Sundar Pichai continues to focus on investments in artificial intelligence and embedding new generative AI tools into more of Google’s key products. To get there, Pichai has said the company has to make cuts elsewhere, meaning more layoffs on top of last year’s 12,000 cuts, which amounted to roughly 6% of its full-time workforce.
“We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud,” Pichai said in Tuesday’s press release. “Each of these is already benefiting from our AI investments and innovation.”
In December, Google launched the large language model called Gemini, which it considers its largest and most capable AI model to date. The company is planning to license Gemini to customers through Google Cloud for them to use in their own applications.
Alphabet said due to the workforce reductions last year, the company recorded severance and related charges of $2.1 billion for 2023. Additionally, Google exited some of its offices, resulting in charges of $1.2 billion for the quarter and $1.8 billion for the year.
Alphabet Chief Financial Officer Ruth Porat said on the earnings call that severance-related expenses in the first quarter will be about $700 million.
Net income jumped 52% in the fourth quarter to $20.7 billion, or $1.64 per share, from $13.6 billion, or $1.05 per share, a year earlier. Operating margin, the profit left after subtracting costs to run the business, expanded to 27% from 24%.
Other Bets, which includes the Waymo self-driving car business and the Verily life sciences unit, reported revenue of $657 million, up from $226 million the year prior. Its loss narrowed to $863 million from $1.24 billion.
Alphabet shares are up 56% in the past year, not including the after-hours drop. Shares of Meta and Microsoft have also reached fresh highs as investors continue to pour into tech stocks.
Microsoft reported better-than-expected financials on Tuesday but it’s stock price also fell following the announcement. Amazon, Apple and Meta are scheduled to release results Thursday.
— CNBC’s Jennifer Elias contributed to this report.
An Amazon worker moves boxes on Amazon Prime Day in the East Village of New York City, July 11, 2023.
Spencer Platt | Getty Images
Amazon is extending its Prime Day discount bonanza, announcing that the annual sale will run four days this year.
The 96-hour event will start at 12:01 a.m. PT on July 8, and continue through July 11, Amazon said in a release.
For the first time, the company will roll out themed “deal drops” that change daily and are available “while supplies last.” Amazon has in recent years toyed with adding more limited-run and invite-only deals during Prime Day events to create a feeling of urgency or scarcity.
Amazon launched Prime Day in 2015 as a way to secure new members for its $139-a-year loyalty program, and to promote its own products and services while providing a sales boost in the middle of the year. In 2019, the company made Prime Day a 48-hour event, and it’s since added a second Prime Day-like event in the fall.
Prime Day is also a significant revenue driver for other retailers, which often host competing discount events.
Technology
SK Hynix shares extend gains to over 2-decade highs as parent group reportedly plans AI data center
OpenAI CEO Sam Altman speaks during the Snowflake Summit in San Francisco on June 2, 2025.
Justin Sullivan | Getty Images News | Getty Images
OpenAI has been awarded a $200 million contract to provide the U.S. Defense Department with artificial intelligence tools.
The department announced the one-year contract on Monday, months after OpenAI said it would collaborate with defense technology startup Anduril to deploy advanced AI systems for “national security missions.”
“Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains,” the Defense Department said. It’s the first contract with OpenAI listed on the Department of Defense’s website.
Anduril received a $100 million defense contract in December. Weeks earlier, OpenAI rival Anthropic said it would work with Palantir and Amazon to supply its AI models to U.S. defense and intelligence agencies.
Sam Altman, OpenAI’s co-founder and CEO, said in a discussion with OpenAI board member and former National Security Agency leader Paul Nakasone at a Vanderbilt University event in April that “we have to and are proud to and really want to engage in national security areas.”
OpenAI did not immediately respond to a request for comment.
The Defense Department specified that the contract is with OpenAI Public Sector LLC, and that the work will mostly occur in the National Capital Region, which encompasses Washington, D.C., and several nearby counties in Maryland and Virginia.
Meanwhile, OpenAI is working to build additional computing power in the U.S. In January, Altman appeared alongside President Donald Trump at the White House to announce the $500 billion Stargate project to build AI infrastructure in the U.S.
The new contract will represent a small portion of revenue at OpenAI, which is generating over $10 billion in annualized sales. In March, the company announced a $40 billion financing round at a $300 billion valuation.
In April, Microsoft, which supplies cloud infrastructure to OpenAI, said the U.S. Defense Information Systems Agency has authorized the use of the Azure OpenAI service with secret classified information.
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