The Two Reasons Alphabet Stock Is Sinking After Earnings
Alphabet reported an earnings beat and strong cloud growth, but the Google stock is spiraling Wednesday. Here's why.


Shares of Google's parent company Alphabet (GOOGL) slumped out of the gate Wednesday after the search engine giant reported mixed results for its fourth quarter and issued an outlook for capital expenditures that was way ahead of expectations.
In the three months ending December 31, Alphabet's revenue increased 11.8% year over year to $96.5 billion. Its earnings per share (EPS) rose 31.1% from the year-ago period to $2.15.
Alphabet's revenue growth was led by its Google Cloud unit, which achieved a 30% increase in sales to $12 billion. Meanwhile, total advertising revenue was up 10.6% year over year to $72.5 billion, including 13.8% growth to $10.5 billion at YouTube.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Our strong performance in Q4 was driven by our leadership in AI [artificial intelligence] and momentum across the business. We are building, testing, and launching products and models faster than ever while making significant progress in compute and driving efficiencies," said Alphabet CEO Sundar Pichai in a statement.
Pichai added that advances in AI and search are increasing user engagement and that the company's solid results were driven by its AI-powered cloud portfolio and YouTube. "Together, Cloud and YouTube exited 2024 at an annual revenue run rate of $110 billion," he pointed out.
The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $96.6 billion and earnings of $2.13 per share, according to CNBC.
In addition to the top-line miss, accelerated capex spending is weighing on the Magnificent 7 stock Wednesday. Indeed, Alphabet unveiled plans to spend approximately $75 billion in capital expenditures in 2025. This capex figure came in well ahead of analysts' expectations for $58.8 billion in spending.
Is Alphabet stock a buy, sell or hold?
Alphabet has been a market-beating machine for years. In the past 12 months alone, shares have generated a 45% total return (price change plus dividends) through the February 4 close vs the S&P 500's 23% gain. And Wall Street is bullish on the communication services stock.
According to S&P Global Market Intelligence, the average analyst target price for GOOGL stock is $215.44, representing implied upside of roughly 14% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Wedbush is one of those with an Outperform (equivalent to a Buy) and $220 price target on the blue chip stock.
Despite the post-earnings selloff, Wedbush analyst Scott Devitt says he continues "to see a favorable risk/reward for Alphabet and thinks there is a case for multiple expansion in the coming quarters as investors gain more comfort related to infrastructure spending, regulatory risk, and the impact of generative AI on Google Search."
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
A Savings Tool to Empower People With Disabilities
An ABLE account can improve quality of life for individuals with a disability — it permits tax-free saving for ongoing expenses without jeopardizing benefits.
By Ella Vincent Published
-
401(k) Spousal Consent: Lawmakers Reintroduce Legislation
The Women's Retirement Protection Act (WRPA) would prevent spouses from raiding their partners' 401(k) accounts.
By Christy Bieber Published
-
Social Security Fairness Act: Five Financial Planning Issues to Revisit
More money as a public-sector retiree is great, but there could be unintended consequences with taxes, Medicare and more if you're not careful.
By Daniel Goodman, CFP®, CLU® Published
-
Social Security Warning: Five Missteps Too Many Women Make
Claiming Social Security is complicated, and for women the stakes are high. What you don't know can cost you, so make sure you do know these five things.
By Daniela Dubach Published
-
To Buck the Third-Generation Curse, Focus on the Family Story
The key is to motivate the next generations to contribute to the family business in a productive way. You can look to Lawrence Welk's family as a prime example.
By John M. Goralka Published
-
Walmart's Transformative Ways Spark a 100,000% Stock Return
Walmart's strategic store expansion and relentless cost-cutting have catapulted its share price over the years.
By Louis Navellier Published
-
20 Ways to Clean Up Your Finances This Spring
Spring cleaning is therapeutic and stops costly problems from building up around the home. Why not tackle the dusty corners of your finances at the same time?
By Lisa Gerstner Published
-
How Roth Accounts Can Ease Your Tax Burden in Retirement
Strategic Roth IRA conversions can set you up for tax-free income in retirement and a tax-free inheritance for the people you love.
By Jim Hanna Published
-
Are You a High Earner But Still Broke? Five Fixes for That
If you're a HENRY (a higher earner, not rich yet) but feel like you still live paycheck to paycheck, there are steps you can take to get control of your financial future.
By Mallon FitzPatrick, CFP®, AEP®, CLU® Published
-
Tax Diversification: Smart Ways to Preserve Your Nest Egg
A long and active retirement may be costly — and may even bump you into a higher tax bracket. Paying some taxes on your savings now could be the answer.
By Nicholas Shaheen, CFP®, CIMA® Published