Google’s advertising revenue: “Slightly below”

Google’s advertising revenue fell below analysts’ estimates, leading to a drop in Alphabet’s stock.

This balance comes amidst Google’s dominance as a search engine but threatened by artificial intelligence.

Alphabet, Google’s parent company, reported on Tuesday that fourth-quarter revenues exceeded Wall Street expectations.

This was due to increased advertising spending and demand for cloud services driven by artificial intelligence tools.

Alphabet’s stock fell by a negative margin of 5.5%, despite the significant gain it made from Google’s advertising revenue.

Advertising revenue at Google, Alphabet’s main search business, was $48.020 billion, slightly below analysts’ projections of $48.150 billion.

Consequently, its shares fell more than 5.5% before the opening of the New York Stock Exchange (NYSE).

Google’s advertising revenue

These results come at a time of uncertainty for Google, which has dominated the internet for years.

Its leadership position is threatened by new competition due to the rise of generative artificial intelligence, which has allowed companies like Microsoft and OpenAI to offer programs that respond to users’ questions in a more developed manner, as seen with ChatGPT.

While revenue stabilizes, the company has focused on reducing costs, evidenced by job cuts.

Despite Google’s advertising revenue, the company has reduced its workforce from 190,000 to 182,000, and there may even be further departures in the coming months.

Wall Street is also watching several other numbers in the report:

• Google Cloud: $9.190 billion compared to the expected $8.940 billion.
• YouTube ads: $9.200 billion compared to the expected $9.210 billion.
• Traffic acquisition costs: $13.900 billion, compared to the expected $14.100 billion.

Alphabet reported its fastest revenue growth quarter since early 2022, with sales increasing by 13% from $76.050 billion the previous year, according to the company.

However, Google’s advertising revenue, at $65.520 billion, did not reach analysts’ estimates of $65.940 billion.

Meanwhile, through Alphabet, CEO Sundar Pichai continues to focus on investments in artificial intelligence and integrating new generative AI tools into more of Google’s key products.

To achieve this, Pichai has said the company needs to make cuts elsewhere, meaning more layoffs in addition to last year’s 12,000 cuts, equivalent to approximately 6% of its full-time workforce.

Despite Google’s advertising revenue, Alphabet noted that due to last year’s staff reductions, the company recorded severance and related charges of $2.100 billion for 2023.

Additionally, Google exited some of its offices, resulting in charges of $1.200 billion for the quarter and $1.800 billion for the year.

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