Bloomberg Audio Studios, podcasts, radio news. Fourth quarter earnings per share coming in above estimates at two dollars and fifteen cents. Estimates were for two dollars and thirteen cents. Revenue coming in just shy of estimates, but ever so slightly, we can go ahead and say that meets estimates at ninety six point four to seven billion dollars. Estimates are for ninety six point six two billion dollars. Google ad revenue, the one that everybody is watching, came in above estimates
at seventy two point four to six billion. Estimates were for seventy one point seven to three billion, and then, of course the cloud revenue so important, that was a slight miss at eleven point nine to six billion. Estimates were for twelve point one nine billion dollars.
Yeah.
The company also talking about capital expenditures in twenty twenty five, They say they expect to invest about seventy five billion dollars.
Here.
Fourth quarter revenue x TAC, traffic and acquisition costs at eighty one point sixty two billion. That's a little light, folks, eighty two point eighty two billion, And that is what maybe is why the stock is down about five five and a half percent here in the aftermarket. Keep in mind that you know cloud search so important, they are facing intensifying competition. Alphabet also saying AI powered Google Cloud portfolio has stronger demand. Again one of the two key
points from earning so far fourth quarter Google cloud revenue. Again, as Tim mentioned earlier, so important. This is something that has been really helping the company outperform. That is a miss eleven point nine to six billion fourth quarter Google Cloud revenue. The estimate on the street was twelve point nineteen billion. And again, as I mentioned, fourth quarter revenue x tach eighty one point sixty two billion, and that too is a little light, Tim eighty two point eighty
two billion. That place for the search business. Those are the two important businesses for Alphabet. Down now about six percent here in the aftermarket and looking.
For commentary from Sander Pitchai, the CEO of the company. He says that quarter four was a strong quarter, driven by our leadership in AI and momentum across the business. He says, we are building, testing and launching products and models faster than ever in making significant progress and compute and driving efficiencies. He goes on to talk about advances like AI overviews and circle to search, or increasing user engagement.
He says that AI powered Google cloud portfolio is seeing stronger customer demand, and YouTube continues to be the leader in streaming watch time and podcasts.
All right, so interesting, and again we've got this stockdown almost seven percent here in the aftermarket, so some disappointment potentially about kind of those misses you are seeing. As I mentioned, twenty twenty five capex about seventy five billion. This is maybe a big reason why you're seeing some of the selling here in the aftermarket. The estimate on the street in terms of CAPEX for this year twenty
twenty five was fifty seven point nine billions. Again, Alphabet coming out and saying it's these twenty twenty five capex much higher than that seventy five billion dollars. So a big spend there on AI, one would assume and others, but really AI and that build out seems to continue among these big tech companies.
We're seeing shares move lower, shares tumbling more than seven percent after that fourth quarter revenue misses estimates. But I got to tell you, Carol, that fourth quarter outlook or that fourth quarter revenue excluding traffic acquisition costs only slightly shy of estimates eighty one point six two billion dollars, so just a little over a billion dollar shy estimates were for eighty two point eight two billion dollars.
Yeah, I think some of it has to do that those are two of their biggest businesses right and have provided momentum for the company and help them to beat analysts estimates last time around that they reported results. So to see that maybe some disappointment that they came in a little light on both cloud and on their search business. And then to see also that Capex spend, you know
that there might be some concern. So again watching shares of Alphabet, which are up about nine percent here in twenty twenty five, but now in the aftermarket we're seeing pressure and the stock continuing to be down about six point seven percent. Running around in a big way is our own Man Deep saying he follows Alphabet for us Man Deep initial thoughts, it looks like some disappointment on two of their biggest businesses. We're also looking at Capex that seems to be coming in a higher than what
the street was expecting. Stock right now is down about almost seven percent yeah.
I mean, look, they did set up a high bar for the cloud segment. So the fact that we saw a miss there and the other big miss seems to be around the YouTube subscription line, even though it's lumped into that other segment. But even though they beat on YouTube ads, the subscription line seems to have decelerated. But overall, I mean, look, the search was very resilient. You can see that number was strong, which is why when you look at the overall operating income, I mean it was
in line. So given how much weight we put on the cloud and the YouTube segments, the fact that those two disappointed is why you are seeing that knee jerk reaction cloud YouTube.
What about Capex the estimates for fifty eight billion dollars roughly. Alphabet comes out in this press release and says, seeing Capex this year about seventy five billion dollars, is the company being punished for that?
I don't think so, because we know Meta Jeta wasn't there. Yeah. Yeah, look, Meta raised their Capex guide by fifty percent for twenty twenty five, So to me, this number is in line with what Meta is doing. In fact, a lot of people expected that the Google will raise and so I would be surprised if the stock is down because they raised the Capex guide.
Is this you know, I know, you don't give price targets, but seeing a you know, close to seven percent decline six and a half percent right now, given that the company barely missed on fourth quarter revenue, it seems like a big reaction for not that big of a mess.
Look, the way we look at Alphabet right now is everyone feels the you know, the YouTube and the cloud businesses are the growth drivers. So they are one hundred billion dollar undred almost one third of the overall revenue. But that's supposed to be the you know, twenty five to thirty percent grower. This search business is supposed to decelerate just because they have more competition. And look, I
think search is a much higher revenue base. So in this case, the fact that search continues to be resilient and the growth businesses are decelerating, that is why you're seeing this sort of reaction. But overall, I would say, you know, in the case of a company like Alphabet, everything is so interconnected, Like they have six apps with
over two billion monthly active users. Now YouTube is one of those, but then they also have maps and you know the course search business and that's where it's powered by a common digital ads platform. So it's not worthwhile to look at, you know, individual businesses and judge them on their performance in a quarter. Overall business continues to
go very robustly. And you know, you can have a quarter where cloud has a slight miss and YouTube has a slightness, But I think overall, when you look at Alphabet's growth, that's still very strong.
Mandy, what do you want to know about that cloud miss? Again, slight miss and it could be just an off quarter. It happens to companies, but it does it say something about the AI spend in terms of companies.
Look, they are raising their capex. We know they will be spending seventy five billion dollars, right, how does that translate into cloud growth? That's the number one question because if it's decelerating and they're increasing their capex, that's not a good sign. But my feeling is, you know, this is more about compute capacity being available to be deployed
to the customers. Everyone was compute constrained. We know that in twenty twenty four, So is this capex really to alleviate that compute constraints, My guess is yes.
Well, you know, it's so interesting that you say that I was having conversation with people about kind of power nuclear and so on and so forth, and the demand by AI. And you know how we've seen from some of these tech companies that their power isn't necessarily there to power everything that needs to be done in terms of the AI world and all the computing. So does that continue to be a drag on some of these numbers, and so we have to kind of brush all these results with that.
Well, the one other factor with Alphabet specifically is.
The RE world isn't there.
Everyone expects Alphabet to be more kind of compute efficient because they have their own TPUs like equivalent of Nvidia GPUs. So the fact that they're raising their CAPEX despite having their own chips is also somewhat of a negative sign. Although I won't put too much into it. I'd wait for the call, yeah, for them to explain why, you know,
they're raising their CAPEX by fifty percent. But essentially the logic here is they should be able to give out more of their Nvidia GPUs for external consumption and use their TPUs for their own consumption, whereas everyone else has to use in Vidio GPUs for their own apps. But then for Microsoft the remainder goes out for customers. So by then logic Google's cloud growth accelerating made a ton of sense. The fact that this quarter did turn out to be that way, Yeah, it kind of puts that
into question. Why did the cloud growth decelerator or disappoint?
We should point out to that shares of Alphabet still down about six point six percent in the aftermarket. Kind of our red headline is saying Apple Alphabet shares are tumbling after fourth quarter revenue missus estimate. But we're talking with our man Deep seeing for kind of more clarity in terms of what the quarter looked like.
Yeah, I just want to get man Deep's thoughts on Snap because shares of Snap are surging in the after hours of about fourteen percent as we speak. The company sees first quarter adjusted ebit of from forty to seventy five million dollars. Estimate was for seventy nine point nine
million dollars. Perhaps the reason it's hire is because fourth quarter revenue came in at one point five six billion dollars billion dollars, beating estimates ever so slightly, and then first quarter revenue coming in ces first quarter revenue rather from at one point three three billion to one point three six billion, the estimate was for one point three three billion. This is a company where I feel like every quarter the stock moves double digits one way or
another after earnings. What are your immediate thoughts?
I mean, look, when you look at Alphabet, they are adding you know, almost four or five billion dollars in AD revenue search AD revenue every quarter. Look at a snap it's a one point five billion dollar quarter. And so when you compare it that way, the absolute numbers,
I mean, their growth is nothing to talk about. Yes, the bar was really low and they you know, beat the consensus numbers, but in terms of the actual AD dollars, this just shows that Alphabet, when you compare you know, search and YouTube, they are still getting a lot of the incremental and dollars.
How do you compare Google Cloud versus We're going to hear from Amazon obviously, and then we've heard from Microsoft, so you know, put that against them and what we're hearing from from Alpha better Google, Like, how do you.
Yeah, I mean, when you look at Microsoft, Azure Clearly it's a seventy billion dollar business growing at thirty percent. Google Cloud is more fifty billion dollar rund rate close to that, growing at mid thirty five percent, but that growth seems to have come down, and when you look at Amazon Cloud, it's north of one hundred billion dollars growing at high teens. So clearly everyone had their kind of swim lanes in terms of the expectations and what
kind of growth number they're supposed to show. But in this case, the fact that there was a slight miss kind of puts that logic into question. I still think, you know, it comes down to the compute availability and video GPUs not being available. That and the fact that they're raising the capex is a sign that they believe the cloud business will continue to grow.
So if you've seen a retrenchment in capex, you would have said, wait a minute, there's something happened potentially.
And they don't want to miss out on that because this is the market where cloud businesses will really accelerate. Even with the deep seak efficiency and everything that has been talked about, Google should be the best position. Like I said, they have their own TPUs, they should be able to benefit from the efficiency and so that should translate into faster cloud growth. If that's not the case, I expect this sort of reaction and maybe that will be the case tomorrow.
Great stuff. Listen, We're going to be following all of your reporting and research throughout the evening. So Man Deep, thank you so much, Man Deep saying, senior tech industry analyst here at Bloomberg Intelligence. We are not done with alphabet.
Let's bring in Caroline High, the co host of Bloomberg Technology on a Bloomberg TV just to recap everybody. Google's revenue and its search, advertising and YouTube business. Was it better than forecasts? But it looks like traders are focused on In that Google Cloud revenue number, it was one point nine percent below the consensus forecast. Google Cloud operating income was a two point seven percent beat at two point one billion dollars, up from eight hundred and sixty
four million dollars a year earlier. Caroline, why the stockslide? Mean? Deep made the point of YouTube in YouTube specifically subscriptions. What are you looking at?
I think it is to your point cloud, the capex that's being spent on cloud. But ultimately, remember this is exactly what happened to Microsoft. Microsoft beat on its fiscal quarter, but the fact that we saw a one percentage point drop quarter on quarter in terms of revenue growth from the cloud as your business was enough to wipe out all of those gains from actually the beat across the revenue and overall profitability. So I think again, it's why
are you not delivering on the growth area? Why are you seeing thirty percent increase in Google Cloud revenues rather than the higher anticipation? And I wonder if, to Mandy's point, it will be because they were limited in scale. The supply side is the issue here, not the demand side.
Well, and they did say AI powered Google Cloud portfolio portfolio. Excuse me, how stronger demands. So they're kind of putting it out and it almost feels like you want some clarification about okay, so give us a little bit more color about what's going on here.
And this is why the calls have been so important. Remember we sat here and Apple's numbers came out, stop dropped. Then suddenly Tim Cook comes on all buoyant, Meta does the same. They were incredibly late. Then numbers did miss on a forward looking forecast, but again they came on and talked so optimistically about the opportunity if stand up pitch I gets it right and says, look, we're still just ultimately limited on our capacity thus far, but bear
with us. We're investing big time. We have got the one stop shop for vertically integrated generative AI. We are making the Lange larger language model, We're making our chips, we're providing it, and it's making our search products still so fabulous. He has an ability to navigate some of the thornier questions around antitrust, around China and geopolitics.
Hey, look, Amazon shares reached a new record today, but after hours they're down about one point four percent, kind of a knee jerk reaction in sympathy with what we heard from Alphabet. Does today's report tell us anything about what we'll hear from Amazon on Thursday when it comes.
To the cloud?
I mean, who knows whether some of the slow down and Google is an opportunity for Amazon who had bigger
scale in data centers. But again, we've heard from Matt Garman over at AWS before talking of this need to get the Nvidia chips and perhaps that these delays that you've had to blackwell for example, and the role at has been a supply side thorn in the side for a lot of these businesses, and that's why they're turning to their own chip designs and why Broadcom is on the upside because maybe with bigger capex from Alphabet, it's going to again be winning out in terms of business
as companies like cloud or providers want to depend on their own supply side too.
I do.
I think there's going to be a knee jeck reaction, as you say, but Amazon's got very different business model in terms of.
Advertising as well, Caroline, I have to roll some other things in. First of all, let's remind everybody that shares of Alphabet or down about six and a quarter percent here in the aftermarket, so they've kind of settled at this level. And assume as soon as the car comes we could see some movement in the stack once again. But it's coming in a day where US China teariffs
against one another. China's return valiatory actions included an antro launching an anti trust investigation to Google extraordinary, and then just earlier we had Alphabet come out and say Google's removed a passage from its AI principles the pledged to avoid using the tech technology and potentially harmful applications such as weapons. There's just so much here to unpack. The regular first of all, the retaliatory actions by China and how are you kind of rolling?
Then?
Is a just I mean, the stop ended up the day at a record high, so people really felt that, yes, this is an Android issue most largely, but this is the game of tit for tat and ultimately it's not going to affect their business model too much in the longer term. So I think you're right though, to fold it.
Maybe the pan andeer element of all of this that has been the software bet for generative AI over the last year, and they are all around defense, around the focus on general to AI and what it can do for government, and it has been a limitation in the past for Alphabet and Google, but people like upstarts, the andriills coming in here being like, you need to be okay with making this sort of generative AI in innovation before we.
Let you go. AMD is out with results. Shares in the after hours are high about about three point four percent. The company c's first quarter revenue coming in at six point eight billion to seven point four billion shares climbing as first quarter salesfe tops estimates at midpoint. Your knee jerk reaction to you AMD relief.
They needed to assure their investor base, Lisa, who has been under a lot of duress because data center serve a provision. Ultimately, AI accelerators have not been able to match the prowess of Nvidia, everyone feeling, in fact, they've been analyst after analysts downgrading the stock, worrying that they just aren't there when it comes to a real competitor. But the fact that she's able to deliver in margins,
the fact that she's still saying, like I'm competitor. I'm focused on R and D and expenses coming in perhaps a little bit higher there. But they need R and D, they need to focus on the AI accelerator because they've begin really tough competition in the world of PC and other And remember you and I are buying PCs as much as we used to do.
All right, grid stuff, I mean, God moving around, Caroline, Thank you so much, Caroline High of course, go host to Bloomberg technolog Ian Bloomberg TV Catcher at eleven am Wall Street time on Bloomberg Television