Alphabet search revenue falls short of expectations, shares drop

The news: Google-parent Alphabet’s fourth-quarter advertising revenue fell below market expectations as high interest rates and economic uncertainty pressured marketing budgets.

The numbers: Alphabet reported ad revenue of USD65.52 billion ($99 billion) in the December quarter, against analyst expectations of USD66.1 billion. Overall revenue came in at USD86.3 billion, versus estimates of USD85.3 billion. Shares in the company fell more than 5% in after hours trade in New York.

The context: The disappointing results from its core search business overshadowed Alphabet's efforts in artificial intelligence and cloud business. Alphabet has faced tough competition for ad budgets from other online platforms such as Facebook, Instagram, TikTok and Amazon.com, alongside mixed economic signals in the US. The company also faces tough competition in artificial intelligence from ChatGPT's creator OpenAI and its financial backer Microsoft.