Alphabet Inc. Shares Drop After Q4 2024 Earnings Report
Alphabet Inc., the parent company of Google, saw its shares drop as much as 9% in after-hours trading following the release of its fourth-quarter 2024 earnings report. The company reported revenue of $96.47 billion, missing Wall Street’s expectations of $96.56 billion, despite earnings per share (EPS) of $2.15, which slightly beat estimates of $2.13. The decline in stock price was driven by concerns over slowing revenue growth and a significant increase in capital expenditures, particularly in artificial intelligence (AI) investments.
Alphabet announced plans to invest $75 billion in capital expenditures in 2025, surpassing Wall Street’s expectations of $58.84 billion. This investment is aimed at expanding its AI infrastructure, including servers and data centers, to support its Google Services, Google Cloud, and Google DeepMind divisions. CFO Anat Ashkenazi emphasized the company’s focus on meeting growing demand for AI products, noting that Alphabet exited 2024 with more demand than available capacity.
The company’s cloud revenue for the quarter was $11.96 billion, falling short of the $12.19 billion expected by analysts. However, cloud revenue still grew 30% year-over-year, reflecting strong demand for AI-driven services. Other segments, such as YouTube advertising and Google Search, showed mixed results. YouTube ad revenue reached $10.47 billion, slightly above expectations, while search revenue grew 12.5% to $54.03 billion. The “Other Bets” segment, which includes Waymo and Verily, reported revenue of $400 million, a 39% decline from the previous year.
Despite the revenue miss, Alphabet’s net income for the quarter increased by 28% to $26.54 billion, up from $20.69 billion a year earlier. The company remains optimistic about its long-term AI strategy, with CEO Sundar Pichai highlighting the transformative potential of AI across industries and its ability to democratize access to information.
Analysts remain cautiously optimistic about Alphabet’s stock, with a consensus rating of “Moderate Buy” and a price target implying a 6.11% upside from current levels. However, concerns about rising capital expenditures and competitive pressures in the AI space may weigh on investor sentiment in the near term.
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