Alphabet, owner of Google, has disappointing holiday ad revenue; stocks plummet

Alphabet’s holiday ad sales disappointed Wall Street on Tuesday, missing expectations and overshadowing the tech giant’s investments in artificial intelligence and the cloud.

Shares fell more than 4% in aftermarket trading.

Google faces stiff competition from two players that have attracted the attention of the corporate world, OpenAI, maker of ChatGPT, and its backer, Microsoft.

Google is bringing a powerful template suite called Gemini to rival ChatGPT Bard.

The company has reached a deal to invest up to $2 billion in artificial intelligence startup Anthropic, which is courting customers of big cloud rivals Microsoft and Amazon. The company is also making Gemini available to advertisers, ensuring their investments continue to flow into Google’s search business.

However, Alphabet faces challenges. AI’s advertising push may remain distant amid concerns that geopolitical and economic uncertainties could discourage ad buyers.

In this context, Alphabet missed expectations in terms of advertising revenues, recording $65.5 billion in the fourth quarter, while analysts estimate, on average, $66.1 billion, according to data from LSEG. A year earlier, revenue had been $59.0 billion.

Alphabet has faced stiff competition for advertising budgets from other online platforms such as Facebook, Instagram, TikTok and Amazon.com, as well as mixed economic signals in the United States.

According to LSEG data, overall revenue for the quarter ended Dec. 31 was $86.3 billion, compared to estimates of $85.3 billion.

Source: Terra

Rose

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