Google's in the hot seat with both Wall Street and China

Here’s a market-moving mouthful: Alphabet reported earnings the same day China launched an anti-trust probe into the company — all while Presidents Trump and Xi volleyed tariffs back and forth. Stocks turned red overnight. First time reading? Join 190,000 self-directed investors and sign up here.

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Google misses the mark

Turns out even a $2.5 trillion company has off days.

Alphabet reported mixed fourth-quarter earnings after the bell Tuesday and its shareholders couldn’t stomach the results.

Shares plunged more than 9% in after-hours trading following the news:

• Earnings per share: $2.15, above $2.13 LSEG estimate
• Revenue: $96.47 billion, below $96.56 billion LSEG estimate

To be clear, investors weren’t selling off simply for the marginal revenue miss.

Its cloud business in particular fell flat — just as Microsoft’s did a week ago — coming in at $11.96 billion for the quarter, below expectations for $12.19 billion.

“The cloud division’s importance is critical in driving AI services and applications,” said Jay Woods, CMT , chief global strategist for Freedom Capital Markets . “Investors were hoping to see more bang for their buck and were disappointed.”

While earnings per share did beat expectations, it was the smallest beat of 2024 at less than 1%, as the chart below illustrates.

The quarter before, for instance, Alphabet beat Wall Street’s EPS estimates by nearly 15%.

Some other key numbers:

• YouTube ad revenue: $10.47 billion, up 13.8% from a year ago
• Google Search revenue: $54.3 billion, up 12.5% from a year ago
• Google ad revenue: $72.46 billion, up 10.6% from a year ago

Notably, Alphabet also announced $75 billion in capital expenditures for 2025 — more than expected — to continue investing in artificial intelligence.

“Will investors shake off this shortfall in cloud and focus on the positive aspects of this giant conglomerate?” Woods said. “For now it’s in the penalty box until better results on its cap-ex start to get realized.”

China, tariffs and AI

President Trump on Monday delayed tariffs for Canada and Mexico after striking deals with the leaders of each nation, but his 10% levy on China took effect early Tuesday, as he promised.

Minutes later, however, Beijing announced a series of moves against the US:

• Fresh 15% tariffs on about a range of US products and energy
• Export controls on key minerals, effectively immediately
• It added US biotech firm Illumina and retailer PVH Group to its unreliable entities list

Oh — and it launched an antitrust investigation into Google.

…the day of its earnings release, and only a handful of days after China’s DeepSeek rattled every major US technology company that’s bet big on AI.

Just to keep score, here’s how earnings have gone among the Magnificent Seven stocks that have reported so far:

• Meta: beat
• Tesla: miss
• Apple: beat (but missed on iPhone deliveries)
• Microsoft: miss
• Alphabet: miss

Amazon reports quarterly results on February 6, and Nvidia is due on the 26th.

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