GOOGL: Google Stock Plunges 7% on Slight Revenue Miss, AI Bets Not Paying Off

Google parent is falling behind in the AI race. To catch up, it pledged as much as $75 billion to go to full-blown AI.

🌎 Google Parent Shares Slide

• Alphabet stock GOOGL slumped 7% in pre-market activity Wednesday after the company released its fourth quarter earnings report. It wasn’t too good. And raised some concerns for the future, mostly tied to excessive spending.
• Earnings per share for the Google parent arrived at $2.15 against $2.13 expected by Wall Street. Revenue missed by a 100 million dollars, landing at $96.5 billion against $96.6 billion eyeballed by analysts.

🌧️ Cloud Division Revenue Flops

• Some more numbers before the big takeaway: advertising on YouTube surpassed expectations. The annoying and unskippable ads before your cooking videos picked up $10.47 billion against $10.23 billion expected. Overall, revenue grew 12% year over year, advertising revenue grew 10.6%.
• The big takeaway: Google’s AI division — the cloud — didn’t pay off. Revenue reached $11.96 billion against $12.19 billion expected by return-hungry investors.

🤔 Is It Worth It?

• What really bugged the market was the tech titan’s continued splurge on AI. Alphabet said it plans to fork out as much as $75 billion in capital expenditures this year for data centers and other AI-focused initiatives. For the current quarter, capex are expected to hit between $16 billion and $18 billion.
• Apparently, cloud-computing sales aren’t doing numbers, which is sounding some alarm bells as to whether all that market cap and record high share price are worth the investor effort. Alphabet is on track to nearly wipe out all its gain for the year at the opening bell.