Alphabet shares slide on disappointing Google ad revenue

Alphabet shares slid more than 6% in extended trading on Tuesday after the company reported ad revenue that missed analysts’ estimates.

Here are the key numbers:

• Earnings per share: $1.64 vs. $1.59 expected by LSEG, formerly known as Refinitiv.
• Revenue: $86.31 billion vs. $85.33 billion expected by LSEG.
• Google Cloud: $9.19 billion vs. $8.94 billion expected, according to StreetAccount.
• YouTube ads: $9.2 billion vs. $9.21 billion expected, according to StreetAccount.
• Traffic acquisition costs: $13.9 billion vs. $14.1 billion, according to StreetAccount.

Alphabet reported its fastest quarter for revenue growth since early 2022, with sales climbing 13% from $76.05 billion a year earlier, the company said in a statement. However, ad revenue of $65.52 billion trailed analysts’ estimates of $65.94 billion, according to StreetAccount.

YouTube, which has been helping to drive accelerated growth, came in just shy of expectations.

The results, while generally above estimates, weren’t enough to satisfy investors, who pushed the stock to fresh highs last week. Facebook’s ad business is growing faster, and TikTok represents an ongoing competitive threat as younger users turn to the app to create short viral videos.

Google Cloud remains a growth engine, with 26% expansion in the fourth quarter compared to a year ago. The company is also drawing profit from the cloud business, which was losing money for years as it tried to keep up with Amazon Web Services and Microsoft Azure. Operating income in the fourth quarter was $864 million, following a year-ago loss of $186 million.

Across Alphabet, CEO Sundar Pichai continues to focus on investments in artificial intelligence and embedding new generative AI tools into more of Google’s key products. To get there, Pichai has said the company has to make cuts elsewhere,…