Alphabet’s cloud computing business underperformed expectations in the fourth quarter, but investors should not be too quick to sell off the stock just yet. While the company’s cloud revenue grew 30% year-over-year, it fell short of analyst estimates. However, Alphabet’s overall performance was still strong, with earnings beating expectations and core profit centers experiencing robust growth.
The main issue lies in the “other bets” division, which includes experimental projects like Waymo and Verily. This segment’s revenue slipped, and its loss worsened. Despite this, Alphabet has never generated more revenue or produced more profit than right now. Its profit margins are also strong at 32.1% of revenue.
The sell-off on Wednesday was likely influenced by concerns over the company’s planned spending on AI data centers and regulatory issues. However, these challenges do not diminish Alphabet’s long-term prospects. The company remains the center of most people’s digital connection, with its Google search engine handling about 90% of the world’s web searches.
The global cloud computing industry is poised to grow at an average annual pace of over 20% through 2030, and the AI platform market will expand at an annualized pace of 45% through 2028. This presents a significant opportunity for Alphabet to tap into growing demand.
Investors who missed out on previous successful investments should not miss this chance to get in on the action. With its strong core performance and promising long-term prospects, Alphabet remains a buy despite the recent stumble over Q4 cloud growth.
Source: https://finance.yahoo.com/news/id-still-buy-alphabet-stock-082500260.html