Alphabet Posts $127.6B Q4 Revenue, Shares Drop 8% on Surging AI Spending
Alphabet reported fourth-quarter revenue of $127.6 billion alongside an EPS miss, sending its stock down 8% in after-hours trading as capital expenditures surge.
Alphabet, the parent company of Google, reported its fourth-quarter results on Wednesday, posting revenue of $127.6 billion, in line with expectations. Earnings per share for the quarter stood at $2.12, compared to analyst forecasts of $2.94 per share. Following the release, the stock dropped roughly 8% in after-hours trading.
Google's free cash flow plunged to $9.07 billion, significantly below analyst estimates of $2.70 billion. Operating income totaled $40.58 billion, missing FactSet forecasts of $43.19 billion. Alphabet's search revenue came in at $63.35 billion, falling short of the anticipated $64.96 billion.
Despite the misses, the company announced that its Gemini artificial intelligence application has reached one billion users, making it the fastest-growing product in its history. Alphabet is banking on key growth engines, including the recent rollout of the Gemini language model, enterprise AI agents, and the expansion of AI services within Workspace.
Alphabet shares have lagged behind major tech peers, rising only 3% year-to-date and reflecting a 20% drop from its peak in May, which brought its market valuation down from $4.8 trillion to $3.8 trillion. The decline is largely driven by soaring capital expenditures on data centers and processors, with annual capital expenditure forecasts raised to between $195 billion and $205 billion.
