Shares of Alphabet (GOOG / GOOGL) are down 5% after the technology company issued fourth quarter 2023 financial results that showed its online advertising revenue is slowing down.
However, despite the decline in online ad sales, Alphabet still managed to beat Wall Street forecasts on the top and bottom lines.
The internet search giant reported earnings per share (EPS) of $1.64 U.S. versus $1.59 U.S. that had been expected among analysts.
Revenue in Q4 2023 totaled $86.31 billion U.S. compared to $85.33 billion U.S. that was forecast on Wall Street. Total sales at the company were up 13% from a year earlier.
However, revenue from online advertising totaled $65.52 billion U.S. in the quarter, missing analysts’ estimates of $65.94 billion U.S. The miss was blamed on a dip in ad sales at YouTube.
The advertising disappointment was partially offset by Google Cloud, which remains a growth engine for Alphabet.
Revenue in the Google Cloud segment grew 26% in Q4 2023 from a year earlier. The cloud business is now profitable after years of losses.
In Q4, Alphabet earned $864 million U.S. from Google Cloud, up from a year-ago loss of $186 million U.S.
Alphabet’s operating margin, the profit left after deducting the costs to run the business, expanded to 27% from 24% in Q4.
In its earnings release, Alphabet said it will continue to focus on investments in artificial intelligence (A.I.) and embedding new A.I. tools into more of Google’s products this year.
In December, Google launched the large language A.I. model called “Gemini” that is its largest and most capable model yet. The company plans to license Gemini to customers through Google Cloud.
Alphabet’s Other Bets segment, which includes the Waymo self-driving car unit and the Verily life sciences business, reported revenue of $657 million U.S., up 190% from $226 million U.S. a year ago.
Before today (Jan. 31), Alphabet’s stock had increased 53% over the last 12 months and was trading at $151.46 U.S., just shy of its all-time high on a split adjusted basis.
