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Investing.com -- Google (NASDAQ:GOOGL) stock tumbled more than 7% in after-hours trading after the tech giant reported mixed Q4 results, but Piper Sandler analysts view the pullback as a buying opportunity.
Google’s (NASDAQ:GOOG) fourth-quarter results showed a 12% year-over-year revenue growth, slightly above the Street’s expectations, but its EBITDA was marginally below forecasts.
The company experienced strong results in its Search and YouTube segments, with Search revenue being 1% above Piper Sandler’s estimates and YouTube 4% better, benefiting from political advertising.
However, Google Cloud and Subscriptions segments did not perform as well, with Cloud growing 30% year-over-year but still 3% below Piper Sandler’s prior estimate.
CEO Sundar Pichai highlighted the implementation of Gemini across all seven of Google’s products with over 2 billion users each. The company also noted a significant increase in customers and usage of its Vertex (NASDAQ:VRTX) AI and a doubling of developers using Flash 2.0 in approximately six months.
Regarding advertising, Google surpassed its goal of a $100 billion combined Cloud/YouTube revenue run rate, ending the year at around $110 billion.
“Search growth was led by financial services & retail,” analysts Thomas Champion and James Callahan said in a note.
Looking ahead, Google’s new CFO Ruth Porat forecast capital expenditures (CAPEX) for fiscal year 2025, which is expected to be around $75 billion, significantly higher than the Street’s estimate of approximately $58 billion. This guidance marks an increase from Piper Sandler’s prior expectation of $62 billion.
Google’s depreciation growth is anticipated to accelerate, following a 28% year-over-year increase in 2024.
Following the earnings report, Piper Sandler slightly lowered its estimates for Google. The firm acknowledged some impact from capacity constraints in the Cloud segment but expressed continued confidence in the company’s fundamentals.
“[We are] buyers on weakness,” analysts said, maintaining an Overweight rating on the stock, while tweaking the price target to $208 from $210.