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.
CEO of Palantir Technologies Alex Karp attends the Pennsylvania Energy and Innovation Summit, at Carnegie Mellon University in Pittsburgh, Pennsylvania, U.S., July 15, 2025.
Nathan Howard | Reuters
It’s been a tough November for Palantir.
Shares of the software analytics provider dropped 16% for their worst month since August 2023 as investors dumped AI stocks due to valuation fears. Meanwhile, famed investor Michael Burry doubled down on the artificial intelligence trade and bet against the company.
Palantir started November off on a high note.
The Denver-based company topped Wall Street’s third-quarter earnings and revenue expectations. Palantir also posted its second-straight $1 billion revenue quarter, but high valuation concerns contributed to a post-print selloff.
In a note to clients, Jefferies analysts called Palantir’s valuation “extreme” and argued investors would find better risk-reward in AI names such as Microsoft and Snowflake. Analysts at RBC Capital Markets raised concerns about the company’s “increasingly concentrated growth profile,” while Deutsche Bank called the valuation “very difficult to wrap our heads around.”
Adding fuel to the post-earnings selloff was the revelation that Burry is betting against Palantir and AI chipmaker Nvidia. Burry, who is widely known for predicting the housing crisis that occurred in 2008 and the portrayal of him in the film “The Big Short,” later accused hyperscalers of artificially boosting earnings.
Palantir CEO Alex Karp vocally hit the front lines, appearing twice in one week on CNBC, where he accused Burry of “market manipulation” and called the investor’s actions “egregious.”
“The idea that chips and ontology is what you want to short is bats— crazy,” Karp told CNBC’s “Squawk Box.”
Despite the vicious selloff, Palantir has notched some deal wins this month. That included a multiyear contract with consulting firm PwC to speed up AI adoption in the U.K. and a deal with aircraft engine maintenance company FTAI.
But those announcements did little to shake off valuation worries that have haunted all AI-tied companies in November.
Across the board, investors have viciously ditched the high-priced group, citing fears of stretched valuations and a bubble.
In November, Nvidia pulled back more than 12%, while Microsoft and Amazon dropped about 5% each. Quantum computing names such as Rigetti Computing and D-Wave Quantum have shed more than a third of their value.
Apple and Alphabet were the only Magnificent 7 stocks to end the month with gains.
Sill, questions linger over Palantir’s valuation, and those worries aren’t a new concern.
Even after its steep price drop, the company’s stock trades at 233 times forward earnings. By comparison, Nvidia and Alphabet traded at about 38 times and 30 times, respectively, at Friday’s close.
Karp, who has long defended the company, didn’t miss an opportunity to clap back at his critics, arguing in a letter to shareholders that the company is making it feasible for everyday investors to attain rates of return once “limited to the most successful venture capitalists in Palo Alto.”
“Please turn on the conventional television and see how unhappy those that didn’t invest in us are,” Karp said during an earnings call. “Enjoy, get some popcorn. They’re crying. We are every day making this company better, and we’re doing it for this nation, for allied countries.”
Palantir declined to comment for this story.
WATCH: Palantir CEO Alex Karp: We’ve printed venture results for the average American
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024