GOOGL STOCK: Google earnings beat, shares fall as cloud computing growth fails

Google Parents the alphabet (Google) announced third-quarter earnings that beat consensus estimates while revenue beat views. GOOGL stock fell on Wednesday as cloud computing sales growth missed in the third quarter amid an apparent loss in market share Microsoft (MSFT) In the midst of a battle in artificial intelligence.

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Reported after the market closed on Tuesday, Google’s earnings for the quarter ended September 30 jumped 46% to $1.55 per share.

In the third quarter, Google’s total revenue increased 11% to $76.69 billion.

The tech giant reports Google’s earnings under generally accepted accounting principles, also known as GAAP. Analysts had expected earnings per share of $1.46 on revenue of $76 billion.

Google Stock: Cloud Growth Fails

Google said cloud computing revenues rose 22% to $8.41 billion, below estimates of $8.64 billion. Google’s cloud computing business posted 28% growth in the June quarter.

“Google Cloud appears to have ceded market share to Microsoft Azure,” KeyBanc Capital Markets analyst Justin Patterson said in a report.

Microsoft’s cloud computing revenue rose 24% to $31.8 billion in the September quarter.

Microsoft is the largest investor in artificial intelligence startup OpenAI. Microsoft cloud customers develop applications using OpenAI’s underlying models.

“While the loss of Google Cloud will raise concerns about AI positioning, Google suggested some stability in the quarter, and the cloud represents only 2% of total earnings,” Justin Post, a Bank of America analyst, said in a report.

Amazon Web Services, part of Amazon.com (Amzn) is the largest provider of cloud computing services. Amazon reports third-quarter earnings on Thursday.

On the stock market today, GOOGL stock fell 6.2% to 130.18 in early trading.

Also, Google’s ad revenue for the third quarter rose 9% to $59.6 billion versus estimates of $59.1 billion.

GOOGL Stock: YouTube Rebounds

Meanwhile, YouTube ad revenue rose 12% to $7.95 billion. Analysts estimated YouTube advertising revenue at $7.82 billion.

At market research firm Insider Intelligence, analyst Max Wellens said in a report: “Cloud computing is a more complex business than advertising, and one in which Google faces intense competition. While the traction it enjoys among AI startups may pay off.” “In the long term, it doesn’t currently help Google Cloud enough to satisfy investors.”

“Google had a modest win on the top line driven largely by search and to a lesser extent on YouTube, which was partially offset by a slight loss in cloud and networking,” RBC Capital analyst Brad Erickson said in a report.

Google stock buybacks

At Evercore ISI, analyst Mark Mahaney said in a report: “Our best interpretation is that Google Cloud, as a secondary cloud for many customers, likely began and will later finish cost optimization after Amazon Web Services.”

In the third quarter, capital spending was $8.1 billion, below consensus estimates of $9.1 billion. Google also bought back $15.78 billion of its stock, roughly the same amount as in the June quarter.

Google’s traffic acquisition costs in the third quarter rose 7% to $12.64 billion. Google payments related to internet searches to apple (Camel) is a key issue in the Justice Department’s antitrust lawsuit against Alphabet.

As Google’s earnings report approaches, Alphabet shares are up 55% in 2023.

Also, GOOGL stock carries a Relative Strength Rating of 95 out of the best possible 99, according to IBD inventory check.

Follow Reinhart Krauss on X, formerly known as Twitter, @reinhardtk_tech For updates on 5G wireless networks, artificial intelligence, cybersecurity, and cloud computing.

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