Feb 5 - Alphabet (GOOG, Financial) stock fell about 8% on morning trading Wednesday after the quarterly numbers came up a bit short of revenue expectations as earnings per share came in well ahead of consensus. Despite the decrease of $90 million from analyst predictions, the company recorded $96.47 billion in Q4 revenue, a 12% year-over-year increase. Google Cloud, including costs associated with YouTube, brought in $11.96 billion in revenue, $490 million shy of estimates, and net income rose 28% to $26.54 billion.
Investors pored over the company's cloud segment and its huge outlook for 2025 capital expenditure that was raised from a target of $59 billion to $75 billion, up from $16.1 billion of consensus. A large capex primarily aims to increase computing capacity for the company's cloud services, YouTube ads, and general AI projects. A cent topped expectations for $2.15 in EPS, but revenue growth in key segments and search and ad services dampened investors' appetite.
Market watchers offered mixed signals. Alphabet's huge investment into AI and whether it represents a catalyst for future growth versus currently rising costs, competitive pressure, and profitability are both themes. Analysts are divided by the average price target, which is nearly $217. Alphabet's success hinges on whether it can quickly generate high growth from heavy capex.
