Google owner Alphabet beats revenue estimates as cloud losses grow
Google parent company Alphabet beat revenue expectations for the fourth quarter, but revealed hefty losses in its cloud computing division.
The tech giant posted revenue of $56.9bn (£41.7bn) in the final three months of the year, up from $46bn in the same period last year.
Alphabet said the figures were driven by strong performance from Google search and Youtube, which account for the majority of its revenue.
Advertising bounced back from a pandemic-induced drop earlier in the year to grow almost a quarter year on year.
Shares in Alphabet rose more than six per cent in after-hours trading.
The company reported revenue of $3.8bn from its Google Cloud division, which has also benefited from stronger demand during the Covid crisis.
However, Alphabet revealed for the first time that cloud losses grew to $1.2bn over the quarter.
For the full year, the cloud unit racked up losses of $5.6bn, an increased of more than 20 per cent year on year.
The group’s third division, dubbed Other Bets, posted revenue of $192m. This consists of its riskier projects, such as its AI division Deep Mind and self-driving cars firm Waymo.
“Our strong results this quarter reflect the helpfulness of our products and services to people and businesses, as well as the accelerating transition to online services and the cloud,” said Sundar Pichai, chief executive of Google and Alphabet.
“Google succeeds when we help our customers and partners succeed, and we see significant opportunities to forge meaningful partnerships as businesses increasingly look to a digital future.”
“A stay-at-home holiday shopping season and a continuing ad rebound from the beginning of the pandemic has helped Google to post a strong fourth quarter,” Haris Anwar, senior analyst at Investing.com.
“The environment has also become conducive for YouTube, the fastest-growing part of Google’s ad business, as people are spending more time watching the channel during the pandemic, fuelling growth in direct-response ads.
“This all bodes really well for Alphabet’s stock which has underperformed other tech giants due to risks from possible regulatory action.”