Analysts disappointed
Google’s advertising revenue is rising – but not fast enough
January 31, 2024, 1:11 a.m
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The reluctance of advertising customers is causing problems for Alphabet. Revenue from online advertising increased in the last quarter – but not as much as analysts had forecast.
Disappointing advertising revenue has pushed Alphabet’s robust cloud business into the background. Products introduced in recent months to place online ads in a more targeted manner using artificial intelligence (AI) were not yet reflected in the Google parent’s financial statements published after the US stock market closed. Alphabet shares fell four percent after trading.
Advertising revenue, which is the Internet company’s main source of income, rose to $65.52 billion – an increase of eleven percent compared to the same period last year, when Google registered a decline in advertising revenue for the first time since the start of the corona pandemic. But analysts had hoped for around $500 million more. “The disappointing numbers suggest that businesses worldwide are still uncertain about how quickly major central banks will cut interest rates,” said analyst Thomas Monteiro at online brokerage Investing.com.
There were light and shadows in the group’s second important pillar, the cloud business. Sales here grew by a surprisingly strong 25.7 percent to $9.2 billion. Microsoft’s Azure cloud platform, on the other hand, recorded an increase of 30 percent. The software company benefits from its technological lead in generative AI and has integrated the chatbot ChatGPT, developed by OpenAI, into numerous products. Google has so far lagged behind with its competing products “Bard” and “Gemini”.
In the so-called “other bets” – future projects such as self-driving cars or delivery drones – sales of all companies rose from 226 to 657 million dollars. The division’s operating loss has been significantly reduced: from $1.24 billion a year ago to $863 million now.