Alphabet Revenue Climbs 22 Percent But Stock Drops on Skewed Earnings
Alphabet reports strong fourth-quarter revenue growth, but investors push the stock down after an unusual accounting gain masks a smaller core earnings beat.
Alphabet reports $39.3 billion in fourth-quarter revenue, marking a 22 percent increase year-over-year. Despite this strong growth and an earnings per share of $12.77, the company's stock drops more than 2 percent in after-hours trading. The market reacts cautiously because the reported earnings beat relies heavily on a $1.3 billion unrealized gain from an obscure debt security rather than core operational performance.
Google's advertising business brings in $32.6 billion, up 20 percent from the previous year, while "Other" revenues like Cloud and hardware reach $6.49 billion with a 31 percent jump. However, "Other Bets" ventures such as Waymo and Verily struggle as losses climb sharply to $1.3 billion on just $154 million in revenue, falling short of Wall Street expectations.
Investors also express concern over rising traffic acquisition costs, which reach $7.4 billion in the fourth quarter. This metric represents a 15 percent increase year-over-year and a 13 percent jump from the previous quarter, signaling that Google is paying significantly more to maintain its search traffic. These mounting costs, combined with the confusing earnings boost, ultimately overshadow the company's overall revenue growth.