Alphabet (GOOG) reported mixed results for its December quarter, missing analyst expectations on both revenue and earnings per share. While the company maintained its dominance in online advertising, concerns about slowing growth and rising costs triggered a significant sell-off, sending the stock price lower today.

Revenue was $75.94 billion, up 32% year-over-year but below analyst estimates of $76.1 billion. Earnings per share was $1.53, missing the consensus estimate of $1.58. Advertising revenue was$61.21 billion, up 33% year-over-year but also falling short of expectations. Cloud revenue was $5.5 billion, up 41% year-over-year and exceeding expectations.

Why did shares still sell off?

• Ad growth slowed. While Google's ad revenue continues to grow, the pace of growth is decelerating compared to previous quarters. This raises concerns about the sustainability of the company's core business, especially in a potentially weakening economic environment.
• Costs rose. Google is facing rising costs across the board, including employee salaries, marketing expenses, and cloud hosting fees. These rising costs are eating into the company's profitability, further dampening investor sentiment.
• Competition continues to intensify. Google faces growing competition from other tech giants like Amazon and Microsoft in the cloud computing and advertising markets. This competition could put further pressure on Google's margins and growth prospects.
• Shares recently hit all-time highs. Investors are using the weaker-than-expected performance to take profits off the table.

Despite the disappointing Q4 results, Google remains a dominant player in the online advertising and cloud computing markets. The company has a strong track record of innovation and execution, and it is well-positioned to capitalize on long-term growth trends. However, investors will be closely watching Google's ability to address the challenges of slowing growth, rising costs, and increased competition in the coming quarters.

Overall, Google's Q4 earnings report highlights the challenges facing the tech industry in a more uncertain economic environment. While the company remains a leader in its core markets, investors are demanding more clarity on its future growth prospects and its ability to navigate these challenges.