Alphabet stock declines after poor cloud performance
Compared to the impressive cloud performance of Microsoft, Google’s parent company Alphabet has seen its share price fall after disappointing cloud revenue performance.
Despite revenue growth of 11% year-on-year, the results caused Alphabet’s share price to fall 8% after missing analyst estimates.
However, this is the first double-digit growth the company has experienced since before this time last year.
Google Cloud lags behind expectations
Total revenue came in at $76.69 billion, compared to the expected estimate of $75.97 billion. Cloud services revenue for Google’s parent company was expected to reach $8.43 billion, but fell $20 million short of target.
Despite significant investment in Alphabet’s cloud division, consumers have long viewed Alphabet as a bit late to the market compared to the cloud capabilities of competitors such as Amazon and Microsoft.
However, Alphabet officials’ outlook is more optimistic, with CEO Sundar Pichai saying: “I’m pleased with our financial results and product momentum this quarter, with AI-driven innovations across Search, YouTube, Cloud, our Pixel devices and more. We remain focused on making AI more useful for everyone; there is exciting progress and much more to come.”
Google Cloud reported operating income of $226 million, showing significant year-over-year growth from its operating loss of $440 million as of 2022.
“The fundamental strength of our business emerged again in the third quarter, with revenues of $77 billion, up 11% year over year, driven by meaningful growth in Search and YouTube, and momentum in Cloud. We remain focused on wise capital allocation to create sustainable financial value,” said Ruth Porat, President and Chief Investment Officer; FINANCE DIRECTOR.
After experiencing a slowdown in growth compared to the historical annualized growth of recent years, Alphabet announced in January 2023 that it was reducing its workforce and as a result recorded severance and related costs of $2, 1 billion for the nine months ending in September. 30th.