Google Q4 - Cloud underperforms

Google reported numbers on Tuesday night, and the shares promptly sank 8% because the cloud division only grew by 30% to $12 billion in revenue, instead of analysts' $12.2 billion forecast. Google said they had more demand than capacity available - good news for future growth, but not great that the current opportunity was missed.

This biggest news this quarter was the plan to accelerate spending on data centres and servers to $75 billion this year, up from $53 billion in 2024 and a third more than Wall Street had estimated. It seems the Google share price was punished for investing more than expected, and also for 'only' growing at 30%. Wall Street is a funny place.

Overall, group revenue rose 12% to $96.5 billion, thanks to 13% growth in search related revenue and an 11% increase in YouTube ads. Net income rose an impressive 28% to $26.5 billion. Google is one of the cheapest tech stocks around, only trading at 21 times 2025's expected profits.

We are happy holders of this great company, and the recent price drop means this is a good time to buy more.