Alphabet delivered better-than-expected fourth-quarter sales and earnings after the closing bell Tuesday. While there was some weakness in the key advertising parts of Google’s business, there was also a lot to like, despite the stock decline. Total revenue rose 13.5% year-over-year to $86.31 billion, outpacing the $85.33 billion expected, according to estimates compiled by LSEG. Earnings-per-share surged 56% to $1.64, exceeding the $1.59 expected. GOOGL 1Y mountain Alphabet 1 year In our view, this was an overall better-than-expected report that should see full-year estimates from Wall Street analysts move higher in the days to come. Shares were down 5.5% in after-hours trading as sellers seemed to want to focus on the ad revenue softness. Bottom line This was an overall solid result from Alphabet. However, it wasn’t enough to jump over the high expectations that come with a stock trading at all-time highs. Given that setup, the pullback we are seeing after hours was to be expected given that the advertising sales – Alphabet’s bread and butter – came up short. That said, we are encouraged by the strong rebound in Cloud sales and even stronger in Cloud profitability. We expect growth to continue as management works to bring the Gemini Ultra large language model to market. Google saw strong levels of engagement and demand in its vertically integrated artificial intelligence solutions, resulting in “new opportunities for Google Cloud across every product area,” the company said. Management also said on the post-earnings call that total subscription revenue reached $15 billion for the full year 2023, driven primarily by YouTube subscription growth which was helped by the NFL Sunday Ticket. In addition, cost management continues to benefit the bottom line as expense growth again came in below revenue growth and would have been even more favorable if not for a $1.2 billion charge taken during the quarter resulting from office space optimization. Operating income…
Read the full article here
Leave a Reply