Alphabet ended last year with an unprecedented investment binge

Alphabet ended last year with an unprecedented investment binge, denting profit margins and leaving Wall Street with a fresh bout of concern over the internet group’s periodic surges in spending. News of the spending spree wiped more than 3 per cent from Alphabet’s shares when the company announced its latest earnings yesterday, despite a better than expected performance from the Google’s advertising business that underpins its results. Alphabet said it had ploughed another $7.1 billion into capital spending in the final months of last year, taking the total to $25.1 billion for the year as a whole, up from $13.2 billion the year before. That echoed big spending increases at rivals such as Amazon and Facebook last year. The biggest spending increase came from licensing original content for YouTube, which is trying to build a premium subscription business, and expanding the company’s cloud computing division. Alphabet also ploughed cash into new data centres and equipment, nearly doubling its capital spending over the past year… Wall Street’s unease over the latest numbers was tempered by a stronger than expected performance from Google’s advertising business. Alphabet’s gross revenue grew by nearly 22 per cent to $39.3 billion, or about $400 million more than Wall Street had expected…
 
Richard Waters

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