Alphabet stock dives following lower than expected Google ad revenues

Google parent Alphabet’s stock declines more than 5% after the company reported its Q4 earnings, which missed estimates on ad revenue.

The company’s revenue, excluding traffic acquisition costs, was $72 billion, higher than the $63.12 billion generated during the same period in the prior year. However, investors focused on the advertising miss.

Google reported continued growth in its cloud business, which has grown in importance to investors due to its usefulness in artificial intelligence development. Google Cloud revenue beat expectations, crossing $9 billion and amounting to a 26% jump from a year ago.

The company is pushing to claim additional market share in the cloud computing market, where it currently sits in third place behind competitors Amazon and Microsoft.

CFO Ruth Porat and CEO Sundar Pichai both stressed the significance of company simplification for efficiency and cost reductions. In order to support investments and efficient operation in areas of growth, they have concluded a few non-priority initiatives involving several teams. Only a few weeks have passed since Google fired hundreds of employees across several businesses in an effort to reduce costs and concentrate on growing markets like artificial intelligence.

Executives at Google also addressed worries that the development of AI would affect the company’s search offerings because chatbots that use generative AI are altering how users engage with the internet. According to Pichai, AI techniques add to Google’s toolbox by providing users who yearn for a variety of online sources with a greater range and depth of information.

Many believe that Google is lagging behind Microsoft, who was one of the first companies in the computer industry to capitalize on the buzz surrounding consumer AI chatbots.