Google-parent Alphabet shares fall 9.5% for their worst day since 2020 after cloud earnings miss

Alphabet President Ruth Porat said in a press interview that the unit’s sales had been affected by some customers’ cost-cutting. Porat is still acting as the company’s chief financial officer while Alphabet searches for her replacement following her promotion.

“Cloud computing is a much lumpier business than advertising, and one where Google is facing stiff competition,” said Max Willens, an analyst with Insider Intelligence. “While the traction it has among AI startups may bear fruit in the long run, it is not currently helping Google Cloud enough to satisfy investors.”

The business dampened an otherwise steady earnings report, where sales of $64 billion were slightly higher than estimates of $63 billion. Earnings per Share (EPS) of $1.55 was also higher than the $1.45 estimate.

Alphabet said it was pleased with its advertising revenue growth after a period of “historic volatility,” Porat said on an investor call after the results.

YouTube reported $8 billion in revenue, compared with analysts’ average estimate of $7.8 billion. The unit has been a drag on Alphabet’s performance in recent quarters, but the results indicated that it is benefiting from the broader recovery in digital advertising spending.

Alphabet’s Other Bets — the company’s moonshot unit that includes the self-driving car effort Waymo and the life sciences unit Verily — brought in $297 million in revenue while losing $1.2 billion, in line with analysts’ projections.

Before Wednesday's 9.5% drop, the Class A shares of Alphabet had risen nearly 60% this year.