Alphabet stock falls after reporting earnings below market expectations

Alphabet recorded third-quarter results below market expectations, mainly due to a slowdown in advertising, although remote computing (cloud) has further accelerated thanks to artificial intelligence (AI). The parent company of Google missed the target for turnover and net profit, which caused it to be immediately sanctioned in electronic trading after the close on Wall Street, with the title dropping more than 9%. Net profit fell sharply by 25% over one year, to $26.2 billion, according to a press release published on Wednesday.

This contraction is mainly due to an accounting effect linked to the valuation of the group's holdings, which represents $8.7 billion. Reported per share, investors' reference data, the profit is $2.12, well below the $3.02 anticipated by analysts, according to a consensus established by FactSet. As for turnover, it stands at 127.6 billion (+25% over one year), again lower than the 128 billion on which Wall Street was counting.

Slowdown in advertising revenue In detail, it is advertising, Google's historic core business, which is at the origin of the disappointment, with growth limited to 11%, while analysts were hoping for almost 13%. This slowdown more than offset a new surprise from the “cloud”, namely mainly data centers of which Google is one of the largest global players. Revenues from this activity more than doubled (+102% year-on-year), a rate even higher than that posted in the previous quarter (+82%) and the highest in five years, said Alphabet boss Sundar Pichai during a conference call to present the results.

“There is huge demand” for data centers, which provide the computing capacity needed for the development and use of AI, Sundar Pichai said.

Machine-translated from French