Shares of Google’s parent company Alphabet fell. Yesterday, Tuesday, the share price fell by 6 percent. The fall in the shares was due to less than expected festive ad sales and the company’s increased spending on things like buying servers for AI. This information is known in a report of the news agency Reuters.
Alphabet faces competition from online platforms like Facebook, Instagram, TikTok and Amazon for advertising budgets on Google and YouTube. This competition is expected to reduce advertising sales. At the same time, increased investment in the artificial intelligence sector is expected to increase the company’s costs. Analysts believe that the share price has decreased due to these reasons.
According to analysts, several factors are responsible for the decline in advertising revenue. Despite strong retail sales, advertising revenue rose to $65.5 billion from $59.0 billion in the last quarter of last year. But that was below analysts’ average expectation of $66.1 billion.
Thomas Monteiro, an analyst at Investing.com, said the disappointing state of advertising revenue for giants like Alphabet suggests global corporations are still uncertain about central banks’ interest rate cuts.
Google, the inventor of the core technology of artificial intelligence or AI, is currently in a competitive situation with the two main rivals in the sector, OpenAI, the maker of ChatGPT, and Microsoft. Although Google provided early technology in the field of AI, it currently lags behind in the competition with OpenAI and Microsoft. Microsoft’s Azure has grown faster than Google Cloud over the same period. Microsoft is probably investing more than Google in this sector.