Google Cloud Revenue Just Grew 103%, so Why Is the Stock Falling?
Investors may be missing the forest for the trees.
Alphabet reported a staggering 103% growth in Google Cloud revenue for Q3, reaching $30.7 billion, while the company's operating margin for its cloud segment soared to 36.2%, up from 23.7% in Q2. Despite a 26% drop in diluted earnings per share (EPS) to $2.12, Alphabet's stock price plummeted by up to 11% in after-hours trading due to concerns over declining profits.
The primary issue lies in Alphabet's significant investments in equity holdings, which saw a $8.2 billion decline, compared to gains of nearly $12.8 billion in the previous quarter. Nonetheless, the strong cloud growth, AI infrastructure demand, and lower-than-ever stock valuation make Alphabet a compelling investment opportunity.
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