Alphabet’s Cloud Revenue Miss Hits Cloud-Computing ETFs

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Cloud software companies and related exchange-traded funds (ETFs) faced a downswing on Wednesday after Google parent company Alphabet reported that it had missed revenue-growth targets in its cloud-computing business. While Alphabet exceeded analysts’ overall earnings and revenue estimates for the third quarter, its stock price took a significant hit, dropping nearly 9% on the news that the company’s cloud-computing division had not grown as much as expected. The division’s revenue for the quarter was $8.41 billion, falling short of analysts’ estimates of $8.6 billion. The 22% growth in the cloud-computing division was notably slower than the 28% growth observed in the previous quarter.

As Alphabet’s stock faced a decline, cloud-computing ETFs that included the stock also saw losses, although not as dramatic as the stock itself. For instance, the $605 million WisdomTree Cloud Computing ETF (WCLD) declined approximately 3.3% by midday on Wednesday. Similarly, the $505 million Global X Cloud Computing ETF (CLOU) fell by 3%, and the $40 million Fidelity Cloud Computing ETF (FCLD) dropped around 1.4% by midday.

ETF Newz Says:

On the flip side, Microsoft experienced a boost in its stock value thanks to its cloud business. Azure, the company’s cloud division, reported an impressive 29% growth in revenue for the third quarter. As a result, Microsoft’s stock was up by 3% in the late afternoon, bucking the trend of a broader market downturn. This contrast underscores the diverging fortunes of tech giants in the cloud-computing arena.


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