Google's parent company, Alphabet (GOOGL.O), posted third-quarter earnings that missed analyst estimates as the tech giant continues to struggle with rising costs and the aftermath of increased spending.
According to Reuters, Alphabet posted Q3 2019 revenue of $40.5 billion versus analyst forecasts of $40.32 billion. The company also posted earnings per share of $10.12 versus $12.42 as expected by industry analysts.
Total expenses for the third quarter ballooned by 25 percent year-on-year reaching $31.3 billion. The said costs figure even defeated the previous record-high during the fourth quarter of last year that hit $31.1 billion.
Industry experts noted that among the factors that affected the Alphabet's high costs is Google's increased spending. Google has been ramping up spending on several of its units including consumer electronics and cloud computing.
The spending spree came amid increasing competition from Microsoft Corp. and Amazon. Furthermore, the search company had to invest in various aspects of its new businesses such as facilities, more content, and additional employees to supply demand.
Expenses for the cloud computing arm is not expected to stop at any time. The company previously announced that it will continue hiring thousands of employees due to increasing growth in the said business.
Aside from increased spending, some analysts pointed out that Alphabet's earnings were in part hit hard by the French government following a settlement charge with tax authorities reaching $554 million.
While Google has been hard at work in convincing investors that there may be something wrong with its other units such as YouTube, markets spoke of the possible weakness that the world's most popular search platform may be struggling with.
Following Monday's earnings report unveiling, the Alphabet stock shed as much as four percent in after-hours trading, CNBC reported. Despite the dip, the stock later recovered, easing investor worries.
Despite issues about Google's spending activities, it is worth noting that the Alphabet's cloud and electronics units beat analyst estimates. Revenue in these businesses closed at $6.43 billion versus $6.32 billion forecasted to round up the quarter.
There were other notable highs in the company's overall Q3 2019 earnings report. These include revenue of $155 million from its self-driving unit Waymo. Alphabet has been working on diversifying its business units and Waymo is an example that it is on the right track.
Meanwhile, Google is expected to continue hiring salespeople for its cloud and data unit as it is a driving force in the growth and overall profits for Alphabet. Google Cloud has yet to topple the likes of Microsoft and Amazon in the global cloud market.
