Shares of Alphabet, Google’s parent company, plunged in after-hours trading on Tuesday after the tech giant’s Q4 earnings report revealed weaker-than-expected cloud revenue and a significantly higher spending outlook for 2025.
Key Figures
- Alphabet’s stock fell 7% to $193 by 4:35 p.m. EST, wiping out nearly $180 billion in market value.
- The company beat EPS estimates with $2.15 per share, slightly above Wall Street’s $2.12 forecast.
- However, revenue came in at $96.5 billion, narrowly missing expectations of $96.7 billion.
- Google Cloud, a major AI-driven growth area, generated $11.96 billion in revenue—below the projected $12.19 billion.
- Alphabet forecasted $75 billion in capital expenditures for 2025, far exceeding analysts’ $58.8 billion estimate.
- Earlier in the day, Alphabet’s stock hit a record high of $207.71 before tumbling post-earnings.
Advertising Remains A Powerhouse
Alphabet’s core ad business continues to thrive, bringing in $72.46 billion in Q4—easily surpassing forecasts of $71.66 billion and shattering Q3 2024’s $65.85 billion record.
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The Bigger Picture
Despite its dominance in digital advertising—where 75% of its revenue originates—Alphabet is pushing hard into AI with its Gemini chatbot. However, like Meta, it’s committing to aggressive spending in 2025, a move that investors are scrutinizing amid uncertain returns.
With cloud growth slowing and capital expenditures rising, Alphabet’s ability to balance AI ambitions with profitability will be key to its stock’s performance in the months ahead.
