Alphabet's shares experienced a sharp decline, dropping as much as 8% in after-hours trading on Tuesday. This downturn followed the release of the company's fourth-quarter financial results, which fell short of revenue expectations. While the tech giant reported a revenue of $96.47 billion, it narrowly missed analysts' projections set at $96.56 billion by LSEG.
Despite the revenue miss, Alphabet reported an earnings per share of $2.15, surpassing the expected $2.13. The company's net income for the fourth quarter rose significantly to $26.54 billion, compared to $20.69 billion in the same period last year, marking a notable increase in profitability.
In terms of advertising revenue, YouTube performed well, generating $10.47 billion, exceeding StreetAccount's forecast of $10.23 billion. However, Google Cloud's revenue disappointed at $11.96 billion, missing the expected $12.19 billion. Traffic acquisition costs also came in under expectations, totaling $14.89 billion against the anticipated $15.01 billion.
Looking ahead, Alphabet plans to invest a substantial $75 billion in capital expenditures by 2025. This investment underscores the company's commitment to expanding its artificial intelligence strategy. Despite the revenue miss this quarter, Alphabet's overall revenue still reflects a robust 30% increase from the previous year.
The financial results highlight some areas of strength within Alphabet's diverse portfolio, such as exceeding earnings per share estimates by two cents and achieving impressive growth in net income. Nonetheless, disappointing cloud and traffic acquisition revenues indicate areas for potential improvement.