Alphabet (GOOGL) share prices plummeted by as much as 8.4% after its Q4 earnings report, with investors expressing disappointment over the tech giant’s cloud computing revenue growth rate. The company has committed to increasing artificial intelligence (AI) infrastructure spending this year, further dampening investor sentiment.
However, Alphabet’s core business remains strong. Google Cloud saw a 30% increase in revenue to $12 billion, driven by AI infrastructure and generative AI solutions. Despite this, the company faces capacity constraints and plans to allocate approximately $75 billion to capital expenditures focused on technical infrastructure.
The launch of its new Gemini 2.0 AI model is expected to drive growth as it moves closer to becoming a universal assistant. Meanwhile, Google Search revenue climbed nearly 13% to $54 billion, while YouTube ad revenue rose 14% year over year to $10.5 billion.
Investors are cautious about Alphabet’s cloud computing business, but the company’s custom TPUs should help reduce costs. Despite this, the dip in the stock price may be a short-term overreaction to what is a promising long-term story for Alphabet.
Source: https://www.fool.com/investing/2025/02/08/alphabet-shares-tumble-cloud-revenue-buy-stock