The stock of Alphabet (GOOGL) is down 7% after the parent company of Google reported financial results that showed revenue in its cloud-computing unit missed Wall Street targets.
The cloud-computing revenue miss overshadowed what were otherwise stellar third-quarter earnings for Alphabet.
The company reported overall revenue growth of 11%, returning to double digits for the first time in more than a year.
Other highlights from the Q3 print include earnings per share of $1.55 U.S. versus $1.45 U.S. per share that had been expected on Wall Street.
Revenue in Q3 totaled $76.69 billion U.S. compared to $75.97 billion U.S. that was anticipated by analysts, according to data from LSEG, formerly known as Refinitiv.
Alphabet’s return to double digit revenue growth was fueled by a rebound in online advertising.
For Q3, the company reported advertising revenue of $59.65 billion U.S., up from $54.48 billion U.S. a year earlier.
YouTube’s advertising revenue was a particular bright spot, coming in at $7.95 billion U.S. and beating analyst expectations that had called form $7.81 billion U.S. in ad sales.
During the company’s earnings call, Alphabet executives said that “Shorts,” YouTube’s TikTok competitor, now has 70 billion daily views, up from 50 billion daily views at the start of 2023.
However, despite the Q3 success, Alphabet’s stock is slipping after the company’s cloud-computing unit reported revenue of $8.41 billion U.S., which was $20 million U.S. less than Wall Street forecasts.
Cloud-computing has been a key area of investment for Alphabet and is becoming more important with the emergence of artificial intelligence (AI) as companies rely on the public cloud to run big computational workloads.
However, even though the cloud unit disappointed in Q3, it still grew 22% from a year earlier, double the rate of expansion for the company.
Alphabet’s cloud-computing unit also swung to a profit of $266 million U.S. in Q3 after losing $440 million U.S. in the same period a year earlier.
Prior to today, Alphabet’s stock had gained 56% year-to-date and was trading at $138.81 U.S. per share.
Tech Insider
