Alphabet reports fourth-quarter earnings after Tuesday's closing bell. Investors will be focused on cloud momentum and AI traction, with shares of the Google and YouTube parent company holding fast near the record levels achieved last week.

Want insight into the business prospects for a company? Pay attention to what its biggest customers are saying. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) provided its fiscal 2024 fourth-quarter update after the market closed on Tuesday.

TMTPOST -- Alphabet Inc. stocks dived more than 6.9% on Wednesday, erasing all their gains in the past three weeks. Shares sold off on slower-than-expected cloud sales and Google parent’s more aggressive artificial intelligence (AI) spending amid the shock from highly-efficient Chinese upstart DeepSeek.

Alphabet said on Tuesday it will spend $75 billion on its AI buildout this year, 29% more than Wall Street expected, while posting cloud revenue that missed analysts' target. The tech giant's shares were down 9% in extended trading.

Excluding traffic acquisition costs, that figure was $81.6bn, missing Wall Street estimates in a Bloomberg poll of $82.8bn. Net income rose 28 per cent to $26.5bn. Alphabet shares dropped more than 6 per cent in after-hours trading.

Key Takeaways Shares of Google parent Alphabet tumbled Wednesday amid worries about whether the tech giant's spending on AI will pay off. Several analysts lowered their price targets for the stock, citing concerns about the company's weaker-than-expected cloud growth and plans to ramp up spending on AI.

(Reuters) -Alphabet missed Wall Street estimates for quarterly revenue on Tuesday, in a sign the Google parent was taking a hit from increased competition in the digital advertising market and a slowdown in its cloud computing business.

Cloud revenue in the quarter of $12 billion—a 30% increase from last year—just misses analysts’ estimates of $12.2 billion.

Generally speaking, investors do not appreciate slowing growth, as it suggests higher valuations (which are reflected in the share price) cannot be maintained or increased over longer periods. Even so,

Alphabet said Tuesday it will spend $75 billion on its AI buildout this year, 29% more than Wall Street expected, while posting cloud revenue that missed analysts’ target. The tech giant’s shares were down more than 7% in extended trading.