Alphabet Misses Q1 Earnings Estimates as YouTube Ad Revenue Slows
Alphabet reports weaker-than-expected first-quarter earnings and revenue, with YouTube ad revenue falling short due to tough comparisons and rising competition from TikTok. However, Google Cloud continues to show strong growth.
Alphabet reports weaker-than-expected earnings and revenue for the first quarter, causing its stock to slide about 3% in extended trading. The tech giant earns $24.62 per share on $68.01 billion in revenue, both of which miss analyst expectations. While total revenue grows 23% year over year, this represents a significant slowdown compared to the 34% growth seen in the first quarter of 2021.
YouTube ad revenue is a primary weak point, coming in at $6.87 billion instead of the expected $7.51 billion. CFO Ruth Porat attributes this deceleration to tough comparisons with a strong prior year and modest growth in direct response advertising. The shortfall also reflects growing competition from TikTok, even as CEO Sundar Pichai highlights that YouTube Shorts reaches 30 billion daily views.
Google Cloud stands out as a bright spot, generating $5.82 billion in revenue and beating expectations with 44% year-over-year growth. This growth occurs as more large enterprises shift their computing workloads away from private data centers. Despite the positive revenue trend, the cloud division still operates at a loss of $931 million for the quarter.