Google-parent Alphabet (GOOGL) reported December-quarter earnings and revenue that missed Wall Street targets amid slowing growth in internet search advertising, YouTube ads and cloud-computing services. Google stock fell on the news Friday.
Reporting after the market close on Thursday, Google said fourth-quarter earnings tumbled 31% to $1.05 per share. The company reports earnings under generally accepted accounting principles, also known as GAAP. Google recorded a $1.49 billion loss on equity investments in the quarter.
Meanwhile, gross revenue rose 1% to $76.05 billion.
Analysts had predicted Google earnings of $1.18 per share on gross revenue of $76.2 billion. A year earlier, Google reported earnings of $1.53 per share on revenue of $75.3 billion.
Meanwhile, advertising revenue fell 3% to $59.04 billion, missing estimates of $60.58 billion. Google stock analysts had lowered estimates heading into the earnings report.
“Google’s Q4 net revenue growth was below estimates as search, network, YouTube and cloud came in light,” Cowen analyst John Blackledge said in a note to clients. “Management noted that the ongoing advertiser pullback broadened in Q4 amid ongoing macro uncertainty.”
Google stock fell 2.8% to close at 104.78 on the stock market today.
Google Stock: TikTok, YouTube Competition Heats Up
In addition, advertising revenue at Google’s YouTube unit fell more than 7% to $7.96 billion. Analysts had estimated YouTube ad revenue of $8.22 billion, but even that would have been down nearly 5%.
A rival to YouTube, social media firm TikTok has seen its advertising growth boom via its short-form videos.
Google said cloud-computing revenue rose 32% to $7.32 billion, missing estimates of $7.44 billion. In the September quarter, cloud revenue rose 38%.
Google stock had gained 22% thus far in 2023, but dropped 39% last year. The company repurchased $15.4 billion in Google stock in the December quarter.
Shares Face Headwinds
The Google earnings report arrived as the internet giant faces new challenges. Microsoft (MSFT) aims to boost internet search competition with its investment in artificial-intelligence startup OpenAI.
Further, Google on Jan. 20 said it will cut 12,000 jobs, or roughly 6% of its global workforce, amid worries over a U.S. recession.
And the Department of Justice recently filed antitrust charges against Google. Justice officials want to break up Google’s advertising business.
Google stock holds a Relative Strength Rating of 25 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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