Nasdaq Index: Alphabet’s Earnings Shock—Stock Drops 6% After Hours on Revenue Miss

Alphabet Stock Drops 6% After Revenue Miss Despite EPS Beat

Google parent Alphabet (NASDAQ: GOOGL) reported its fourth-quarter earnings, showing a mixed performance that sent shares down 6% after hours. While earnings per share (EPS) came in above expectations, revenue slightly missed Wall Street estimates, raising concerns over growth momentum.

EPS Beats, but Revenue Misses Expectations

Alphabet reported Q4 EPS of $2.15, beating analyst expectations of $2.13. However, revenue for the quarter reached $96.47 billion, falling short of the $96.56 billion expected by analysts surveyed by LSEG. The modest revenue miss overshadowed the EPS beat, leading to the after-hours stock decline.

Despite the pullback, Alphabet’s stock has gained 15.72% in the last three months and is up 43.64% over the past year, reflecting broader confidence in the company’s long-term growth potential. Over the last 90 days, the stock has seen 10 positive EPS revisions against six negative ones, highlighting a mixed sentiment among analysts.

YouTube and Google Cloud Performance Mixed

Key business segments delivered varied results. YouTube advertising revenue came in at $10.47 billion, surpassing StreetAccount estimates of $10.23 billion. This signals continued strength in digital ad spending despite broader concerns in the sector.

Google Cloud, however, reported revenue of $11.96 billion, missing the expected $12.19 billion. This shortfall suggests that cloud competition remains intense, particularly with rivals like Microsoft and Amazon expanding their presence in enterprise cloud services.

Meanwhile, Alphabet’s traffic acquisition costs (TAC), a key expense related to securing advertising placements, totaled $14.89 billion, slightly below expectations of $15.01 billion. Lower TAC can be a positive sign for profitability, but the revenue shortfall raises concerns about ad growth sustainability.

Market Outlook: Short-Term Bearish on Revenue Concerns

Alphabet’s after-hours stock decline suggests traders are reacting more to the revenue miss than the EPS beat. The weakness in Google Cloud revenue is particularly notable, as investors are closely watching its performance amid increasing cloud competition.

While YouTube ad revenue exceeded expectations, the slight revenue miss overall has cast doubt on near-term growth momentum. Traders should expect volatility in Alphabet’s stock as the market digests these results. In the short term, sentiment remains bearish, with potential downside pressure unless the company provides stronger revenue growth signals in upcoming quarters.

More Information in our Economic Calendar.