Alphabet Q4 Earnings Top Expectations

Alphabet Inc., the parent company of Google, reported better-than-expected earnings for its fourth quarter of 2023. However, the company's shares fell sharply in after-hours trading after ad revenue growth missed analyst targets.

Key Takeaways

• Earnings: Alphabet's net income was $20.69 billion, or $1.64 per share, exceeding analyst estimates of $1.61 per share.
• Revenue: Overall revenue grew 13% to $86.3 billion, slightly above analyst expectations of $85.24 billion.
• Ad revenue: Google's advertising revenue for the quarter was $65.52 billion, falling short of analyst projections of $65.73 billion. This includes $48 billion from Google search and $9.2 billion from YouTube ads.
• Cloud revenue: The company's cloud revenue, at $9.19 billion, was up 25% year-over-year, showing continued strong growth in this area.
• Stock price: Google shares dropped 6.5% to $143.05 in after-hours trading.

Reasons behind the stock price drop

• Missed ad revenue target: While overall revenue grew, the company's failure to meet analyst expectations for ad revenue, its core business, spooked investors.
• Slowing ad growth: The 13% growth in ad revenue represents a slowdown from previous quarters, raising concerns about the future pace of growth.

Despite the stock price drop, Alphabet CEO Sundar Pichai remains optimistic
He pointed to the ongoing strength of Google Search and the growing contributions from YouTube and Cloud as reasons for optimism. And also highlighted the company's new AI model, Gemini, as a potential driver of future growth.

Alphabet Inc. Technical Analysis

Alphabet has been in a strong uptrend since February 2023, with the stock price moving upward. Several technical indicators, such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), are pointing to continued upward momentum.

Support and Resistance Levels

The stock has key support levels at around $121-124. A break below these levels could signal a potential reversal of the uptrend.
The stock faces resistance at around $150-153. A break above these levels could lead to further gains.

Moving Averages

The 50-day and 200-day moving averages are both below the current price, indicating that the stock is in a bullish trend. Also 200-day moving average, being below current price, further confirming the long-term bullish trend.

Oscillators

The RSI is currently around 66, which is above the neutral level of 50 but below the overbought level of 70. This suggests that the stock is still in a healthy uptrend.
The MACD line is above the signal line and the MACD histogram is expanding, indicating strong upward momentum.

Bottom Line

From technical point of view, Alphabet's stock is in a strong uptrend, supported by positive momentum and moving averages. However, it is important to note that the stock is approaching resistance levels, so there is a risk of a pullback in the short term. Fundamentals (Alphabet's Q4 results) are mixed. The company beat expectations on earnings and revenue, but its slower ad revenue raises questions about its future. The success of its new AI model, Gemini, could be key to driving future growth.