Alphabet, the parent company of Google, experienced a sharp decline in its stock value, plummeting by 9.5% after its third-quarter earnings report, despite beating overall expectations. The drastic dip was primarily triggered by the disappointment surrounding Alphabet’s cloud revenue, which fell short of projections. In contrast, Microsoft, Alphabet’s key competitor in the cloud-computing market, saw a 2.8% gain due to the success of its AI-driven services.
Analysts reassure investors over Google’s 9.5% stock drop, deeming the reaction excessive given the cloud revenue’s 11% share in Alphabet’s total revenue. Despite falling slightly below expectations at $8.41 billion, Google’s cloud revenue grew by 22% from the previous year. Experts anticipate challenges in AI infrastructure to fade by next year, while integration with advertisements may benefit Google in the long run.
While Alphabet’s cloud business faces headwinds, its core search business remains robust, offering a glimmer of hope amidst the challenges. Analysts caution that the cloud optimization efforts might take several more quarters to yield significant results. Nevertheless, Alphabet’s strong research and technical capabilities position it as a formidable contender, even in the face of stiff competition from Microsoft.
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