Alphabet (NASDAQ:GOOG) Shares Gap Down After Earnings Miss

Key Points

• Alphabet shares plunged after an earnings miss: The stock opened at $283.84 versus a prior close of $321.89 after EPS came in at $2.12, below the $3.01 consensus estimate. Revenue rose 24.7% year over year to $127.58 billion but was slightly below expectations.
• Google Cloud and AI remain key growth drivers: Cloud revenue more than doubled to about $30.7 billion, profit roughly tripled, and backlog reached approximately $561 billion. Potential TPU deals with OpenAI and Oracle could further expand Alphabet’s AI infrastructure business.
• Analysts remain broadly positive despite lowered targets: Alphabet has a “Moderate Buy” consensus rating and an average price target of $419, although several firms recently reduced their targets and one downgraded the stock to “Market Perform.”

Alphabet Inc. (NASDAQ:GOOG - Get Free Report) gapped down prior to trading on Thursday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $321.89, but opened at $283.84. Alphabet shares last traded at $283.7290, with a volume of 24,044,133 shares.

The information services provider reported $2.12 EPS for the quarter, missing analysts' consensus estimates of $3.01 by ($0.89). Alphabet had a return on equity of 51.32% and a net margin of 54.77%. The company had revenue of $127.58 billion during the quarter, compared to the consensus estimate of $127.97 billion. During the same period last year, the company posted $2.87 EPS. The firm's revenue was up 24.7% compared to the same quarter last year.

Key Stories Impacting Alphabet

Here are the key news stories impacting Alphabet this week:

• Positive Sentiment: Google Cloud was the standout: Revenue more than doubled, rising 103% year over year to approximately $30.7 billion, while profit roughly tripled. Backlog expanded to about $561 billion, supporting the long-term AI and cloud growth narrative. Alphabet Q3: The Market Is Selling the Wrong Line Items
• Positive Sentiment: New AI revenue opportunities are emerging: Reports that OpenAI may purchase Google’s internally developed TPU chips, combined with Oracle’s plans to offer Google TPUs through its cloud, could expand Alphabet’s AI infrastructure business and reduce reliance on Nvidia. Google alters its cloud playbook
• Positive Sentiment: Some analysts see an opportunity after the selloff: Bullish commentary points to Alphabet’s strong balance sheet, wide competitive moat, accelerating Cloud business and valuation discount versus other large technology companies. One analyst maintained a $475 price target and Buy rating. Alphabet Buy rating reaffirmed

Wall Street Analysts Forecast Growth

Several research firms recently commented on GOOG. New Street Research dropped their price objective on Alphabet from $455.00 to $405.00 and set a "buy" rating on the stock in a research note on Friday, July 24th. Moffett Nathanson dropped their price target on Alphabet from $380.00 to $370.00 and set a "buy" rating on the stock in a research report on Wednesday, September 16th. Barclays reiterated an "overweight" rating on shares of Alphabet in a research note on Thursday. Citizens Jmp lowered Alphabet from a "mkt outperform" rating to a "market perform" rating in a report on Thursday. Finally, The Goldman Sachs Group lowered their price objective on Alphabet from $440.00 to $435.00 and set a "buy" rating on the stock in a research note on Thursday, July 23rd. Six research analysts have rated the stock with a Strong Buy rating, thirty-five have assigned a Buy rating, five have given a Hold rating and one has issued a Sell rating to the stock. Based on data from MarketBeat, the company currently has an average rating of "Moderate Buy" and an average price target of $419.00.

Insider Transactions at Alphabet

In other Alphabet news, Director Frances Arnold sold 83 shares of the stock in a transaction that occurred on Wednesday, September 30th. The shares were sold at an average price of $340.45, for a total transaction of $28,257.35. Following the transaction, the director directly owned 19,076 shares in the company, valued at $6,494,424.20. This trade represents a 0.43% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. Company insiders own 12.99% of the company's stock.

Institutional Inflows and Outflows

Several hedge funds have recently made changes to their positions in the company. Morton Brown Family Wealth LLC lifted its holdings in Alphabet by 135.5% during the 3rd quarter. Morton Brown Family Wealth LLC now owns 73 shares of the information services provider's stock valued at $25,000 after buying an additional 42 shares in the last quarter. Castlekeep Investment Advisors LLC bought a new position in shares of Alphabet during the 2nd quarter worth $29,000. Livelsberger Financial Advisory bought a new stake in shares of Alphabet in the 3rd quarter valued at about $37,000. Timbuktu Capital Management LLC purchased a new position in shares of Alphabet in the 2nd quarter valued at $46,000. Finally, Robinswood Financial LLC bought a new stake in Alphabet during the first quarter valued at about $57,000. 27.26% of the stock is owned by hedge funds and other institutional investors.

Alphabet Stock Performance

The business's 50-day moving average price is $338.12 and its 200-day moving average price is $338.76. The company has a current ratio of 2.72, a quick ratio of 2.64 and a debt-to-equity ratio of 0.16. The stock has a market cap of $3.47 trillion, a PE ratio of 14.23, a P/E/G ratio of 0.91 and a beta of 1.19.

Alphabet Company Profile

Alphabet Inc is a technology holding company best known as the parent organization of Google. Founded in 2015 through a corporate restructuring, Alphabet oversees Google and a collection of businesses focused on technology, online services, communications, artificial intelligence, and other emerging areas.

Google's principal products and services include its internet search engine, digital advertising platforms, YouTube, Android, Chrome, Google Maps, Google Play, and Google Workspace. The company also provides cloud computing, data storage, cybersecurity, productivity, and artificial intelligence services through Google Cloud.

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