Alphabet Stock: Shares Drop Despite Strong Q4 Profit Growth

Alphabet reported a remarkable 28% increase in fourth-quarter 2024 profits, reaching $26.54 billion, yet market response remained tepid. The company's stock experienced a significant decline of 7.8% on NASDAQ, settling at $190.28. While advertising and YouTube segments demonstrated double-digit growth, overall revenue slightly missed market expectations. The cloud division's performance notably fell short of analysts' projections, contributing to market concerns. Adding to investor apprehension, Alphabet announced plans to invest $75 billion in AI capabilities, substantially exceeding analyst estimates of $58 billion. This aggressive investment strategy, coupled with emerging competition from more cost-effective AI models, particularly from China, has intensified market skepticism.

Analyst Outlook Remains Positive Despite Challenges

Despite current market pressures, analysts maintain an optimistic stance with an average price target of $214.14, well above the current trading price. The stock currently trades significantly below its 52-week high of $207.05, reached in early February 2025. Adding a positive note for investors, Alphabet has announced its first-ever dividend payment, set at $0.519 per share for the current year, while experts project earnings per share of $9.00 for 2025.