Alphabet shares drop despite 22% sales rise

Alphabet, the parent company of Google, has reported 22% rise in fourth quarter sales, fuelled by an increase in online advertising.

Revenues rose to $39.2bn (£30bn) for the final three months of the year.

However, shares in Alphabet fell by more than 3% in after-hours trading as its capital expenditure jumped to $7bn.

The company said it had invested in data centres, hired more engineers and spent money acquiring content for services such as YouTube.

George Salmon, equity analyst at Hargreaves Lansdown, said: “While the core business is still growing impressively, the significant spending shows growth isn’t quite as capital light as had been hoped.”

Over the year, capital expenditure rose to $25.1bn from $13.1bn in 2017.

Alphabet’s chief financial officer Ruth Porat said that capital expenditure would “moderate quite significantly” this year.

The company reported a rise in fourth quarter profit to $8.9bn, reversing from a loss in 2017 due to a one-time tax charge.

For the full year, the firm reported profit of $30.7bn, up from $12.66bn in 2017.