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Alphabet's (GOOGL, GOOG) stock dropped by nearly 7% in after-hours trading after reporting fourth quarter earnings results, posting revenue of $96.47 billion (short of estimates for $96.62 billion) and adjusted earnings per share of $2.15 (beating estimates of $2.13).
The tech giant's cloud division missed revenue forecasts for this quarter: its release of $11.96 billion falling short of estimates for $12.19 billion.
D.A. Davidson's head of technology research Gil Luria appears on Market Domination Overtime to react to Alphabet's earnings results, noting Google Cloud’s deceleration mirrors what happened with Microsoft’s Azure, partly due to the growing focus on artificial intelligence (AI) investments.
"Microsoft, in fact, was pretty clear about the fact that because they were so focused on the AI and the AI investments — and they took those resources from other businesses — they're paying the price for it now with decelerating revenue, significantly decelerating revenue, and the rest of their Azure business," Luria says, explaining that's he's still unsure if "that's the case with Google.
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While the search business remains stable, the cloud miss raises concerns to investors. Luria also highlights that Alphabet's expected $75 billion in CapEx spending for 2025 is a substantial increase.
"That is very aggressive growth." Luria says, maintaining a neutral stance on Alphabet while outlining the challenges of the company's diverse assets being bundled together.
To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
This post was written by Josh Lynch