Google parent Alphabet’s quarterly advertising revenue disappoints
Shares drop 4% after ad sales come in below expectations
31 January 2024 - 00:06
byAkash Sriram
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Google's office in Mountain View, California, the US, May 8 2019. Picture: PARESH DAVE/REUTERS
Bengaluru — Alphabet disappointed Wall Street on Tuesday as holiday season advertising sales came in below expectations and overshadowed the company’s efforts in artificial intelligence and the cloud.
Shares fell more than 4% in after-hours trade.
Google, inventor of foundational technology for today’s AI boom, faces tough competition from the two players that have captured the business world’s attention, ChatGPT’s creator OpenAI and its financial backer Microsoft.
Google is bringing a powerful suite of models called Gemini to its ChatGPT rival Bard. It struck a deal to invest up to $2bn in high-profile AI start-up Anthropic as it courts customers from larger cloud rivals Microsoft and Amazon, and it is putting Gemini into advertisers’ hands so their dollars keep flowing to Google's search business.
Still, AI’s advertising boost may remain far off, in a period of concern that geopolitical and economic uncertainty could discourage ad buyers. The US has started probing AI investments including Alphabet’s, Google is gearing up to appeal a major antitrust case it lost, and the company like others in technology has been cutting jobs.
Against this backdrop, Alphabet came short of expectations for ad revenue, recording $65.5bn in the fourth quarter while analysts on average had estimated $66.1bn, according to LSEG data. It had posted $59bn a year earlier.
Alphabet has faced tough competition for ad budgets from other online platforms such as Facebook, Instagram, TikTok and Amazon.com, alongside mixed economic signals in the US.
Overall revenue for the quarter to end-December stood at $86.3bn, compared with estimates of $85.3bn, according to LSEG data.
Investors have grown more interested in the fortunes of Google Cloud. Last year the division earned its first quarterly profit, but revenue growth slowed as customers streamlined cloud spending.
Microsoft has been a fierce competitor, adding AI to its cloud and productivity suite long embraced by enterprises, while Google has marketed rival tools. OpenAI’s November 2022 launch of ChatGPT ignited a frenzy over generative AI, which can conjure new text and images on command.
Alphabet said Google Cloud revenue in the latest quarter was $9.2bn, while analysts were expecting $8.9 billion.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Google parent Alphabet’s quarterly advertising revenue disappoints
Shares drop 4% after ad sales come in below expectations
Bengaluru — Alphabet disappointed Wall Street on Tuesday as holiday season advertising sales came in below expectations and overshadowed the company’s efforts in artificial intelligence and the cloud.
Shares fell more than 4% in after-hours trade.
Google, inventor of foundational technology for today’s AI boom, faces tough competition from the two players that have captured the business world’s attention, ChatGPT’s creator OpenAI and its financial backer Microsoft.
Google is bringing a powerful suite of models called Gemini to its ChatGPT rival Bard. It struck a deal to invest up to $2bn in high-profile AI start-up Anthropic as it courts customers from larger cloud rivals Microsoft and Amazon, and it is putting Gemini into advertisers’ hands so their dollars keep flowing to Google's search business.
Still, AI’s advertising boost may remain far off, in a period of concern that geopolitical and economic uncertainty could discourage ad buyers. The US has started probing AI investments including Alphabet’s, Google is gearing up to appeal a major antitrust case it lost, and the company like others in technology has been cutting jobs.
Against this backdrop, Alphabet came short of expectations for ad revenue, recording $65.5bn in the fourth quarter while analysts on average had estimated $66.1bn, according to LSEG data. It had posted $59bn a year earlier.
Alphabet has faced tough competition for ad budgets from other online platforms such as Facebook, Instagram, TikTok and Amazon.com, alongside mixed economic signals in the US.
Overall revenue for the quarter to end-December stood at $86.3bn, compared with estimates of $85.3bn, according to LSEG data.
Investors have grown more interested in the fortunes of Google Cloud. Last year the division earned its first quarterly profit, but revenue growth slowed as customers streamlined cloud spending.
Microsoft has been a fierce competitor, adding AI to its cloud and productivity suite long embraced by enterprises, while Google has marketed rival tools. OpenAI’s November 2022 launch of ChatGPT ignited a frenzy over generative AI, which can conjure new text and images on command.
Alphabet said Google Cloud revenue in the latest quarter was $9.2bn, while analysts were expecting $8.9 billion.
Reuters
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