Alphabet’s share price NASDAQ:GOOG fell -8.00% after hours on a revenue miss and concerns about increased capex, at Google’s parent company.
Alphabet Inc the parent company of Google, reported mixed results in its Q4 2024 earnings last night.
The earnings release was upbeat but it fell short of investor expectations.
Alphabet posted a +12.0% year-over-year revenue increase, to $96.5 billion, driven by gains in Services and Cloud Computing. However, that was below analysts’ projections of $96.56 billion.
A small margin of error you might think, yet that differential contributed to a near -8.0% drop in Alphabet’s stock, in after-hours trading
Despite the revenue miss, Alphabet performed well elsewhere;
Its net income jumped by +28.0% to $26.5 billion, while its earnings per share rose to $2.15, and thus above the street’s $2.13 forecast.
Alphabet’s operating income was also higher, up by +31.0% to $31.0 billion, thanks to higher margins across many of its business units.
As part of the earnings release Alphabet announced a $75.0 billion capex plan for 2025. That figure was well above Wall Street’s estimate for capex of just $59.7 billion this year.
A month ago that increase in spending would have been seen as a positive. However, in a post-DeepSeek environment, that’s no longer a given.
Alphabet CEO, Sundar Pichai, highlighted the importance of these investments in maintaining Alphabet’s lead in AI innovation, but the market wasn’t convinced.
On a positive note, Google Cloud continued to grow and posted a +30.0% increase in sales, which jumped to $12.0 billion in Q4, though that number also fell short of Wall Street’s lofty expectations.
Alphabet’s previous performance is coming back to haunt it somewhat, as it’s now being priced for perfection by the market.
Meanwhile, YouTube advertising revenue rose by +14.0% to $10.5 billion, underscoring Google’s dominance in this area of digital media.
However, concerns about rising competition from challengers, such as OpenAI, Perplexity and DeepSeek, have raised questions, about Alphabet’s ability to maintain its competitive edge, whilst managing its cost base.
Overall, the Alphabet results reminded us of the strong fundamentals within the business, but at the same time, they also highlighted the challenges the company now faces. In what could be a transitional period in the worlds of AI, cloud computing, search, digital content, and online advertising.
Google Dividends
There are no future dividends presently declared for GOOG:US as of Feb 5th, 2025. The declaration and payment of dividends are at the discretion of the Company.
Historic Ex-Div dates and amounts
- 09/12/2024: 0.20 USD
- 09/09/2024: 0.20 USD
- 10/06/2024: 0.20 USD
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