Alphabet, Google's parent company, reported its fourth-quarter earnings, falling short of expectations and causing its stock (GOOGL, Financial) to drop over 9% in after-hours trading. The company reported revenue of $96.47 billion, slightly below the expected $96.56 billion, and earnings per share of $2.15, above the anticipated $2.13.
Key highlights include YouTube ad revenue at $10.47 billion, surpassing the expected $10.23 billion, while Google Cloud revenue reached $11.96 billion, missing the anticipated $12.19 billion. Traffic acquisition costs (TAC) were $14.89 billion, below the expected $15.01 billion.
Alphabet announced plans to invest $75 billion in capital expenditures by 2025 to enhance its AI strategy, exceeding Wall Street's expectation of $58.84 billion. For the first quarter, capital expenditures are projected between $16 billion and $18 billion, higher than the previous estimate of $14.3 billion. This quarter's capital expenditure was $14 billion, above the expected $13.26 billion, mainly for technology infrastructure, particularly servers and data centers.
Overall revenue grew nearly 12% year-over-year, with net profit increasing by over 28% to $26.54 billion. Despite disappointing cloud revenue, which was below expectations at $11.96 billion, it still showed a 30% increase from the previous year. Alphabet continues to strive to compete with Amazon Web Services and Microsoft Azure in the cloud sector.
The search business revenue rose to $54.03 billion from $48.02 billion a year ago, and ad revenue increased to $72.46 billion from $65.52 billion. Other segments, including Verily and Waymo, generated $400 million in revenue, below the expected $616.4 million, and down over 39% from the previous year.
