SEVERE WX : Frost Advisory View Alerts

Google's spending spree rattles Wall Street

Google may have a spending problem.Alphabet, the parent company of Google, racked up $7.7 billion in capital e...

Posted: Apr 24, 2018 4:07 PM
Updated: Apr 24, 2018 4:07 PM

Google may have a spending problem.

Alphabet, the parent company of Google, racked up $7.7 billion in capital expenditures for the first three months of 2018 on everything from real estate to undersea cables.

The company reported strong growth in sales and profit for the quarter on Monday, fueled by the strength of its advertising business and helped by a lower tax rate. But its staggering investments appear to be rattling Wall Street.

Google's stock fell as much as 5% in early trading Tuesday.

"The big story from the results was the significant rise in expenses," Brian Wieser, an analyst with Pivotal Research, wrote in an investor note Monday night.

Alphabet spent $2.4 billion in March to buy Cheslea Market in Manhattan to expand its office space in New York City. The company also said it invested in data centers, production equipment and undersea cables.

Related: Google's Facebook turn

Ruth Porat, Alphabet's CFO, told analysts on a conference call Monday that these investments are part of the company's "commitment to growth."

"These combined investments will expand our compute capacity to support our growth outlook across Google, including machine learning, the Assistant and cloud," Porat said.

Separately, Google agreed to pay $1.1 billion to get smartphone expertise from Taiwanese manufacturer HTC, including bringing on about 2,000 engineers and technical staff. The deal was announced in September, but completed last quarter.

Ben Schachter, an analyst with Macquarie, wrote in an investor note Tuesday that Google "sounds like" Amazon in its willingness to invest heavily for the future.

"It sees very large opportunities for long-term growth (search, YouTube, Cloud, cars, health, etc...) and it is going to invest in them," Schachter said. "This is absolutely the correct thing to do and will over the long term increase shareholder value."

The problem, according to Schachter, is that many of the new business opportunities Google is investing in now may not end up being as profitable for the company as its original moneymaker: search.

Huntsville/Redstone
Partly Cloudy
49° wxIcon
Hi: 52° Lo: 37°
Feels Like: 46°
Muscle Shoals
Clear
54° wxIcon
Hi: 56° Lo: 37°
Feels Like: 54°
Huntsville/Madison
Partly Cloudy
50° wxIcon
Hi: 51° Lo: 37°
Feels Like: 45°
Decatur
Clear
51° wxIcon
Hi: 55° Lo: 39°
Feels Like: 51°
Fort Payne
Clear
47° wxIcon
Hi: 52° Lo: 38°
Feels Like: 43°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Cases: 523955

Reported Deaths: 10798
CountyCasesDeaths
Jefferson755821496
Mobile40234800
Madison34153500
Tuscaloosa25423444
Montgomery24084573
Shelby23241242
Baldwin20764302
Lee15642166
Calhoun14365311
Morgan14171274
Etowah13707348
Marshall12015220
Houston10418279
Elmore10023202
Limestone9866148
Cullman9514191
St. Clair9498236
Lauderdale9286233
DeKalb8767183
Talladega8123173
Walker7149277
Autauga6773106
Jackson6769110
Blount6548133
Colbert6237132
Coffee5434113
Dale4782111
Russell431339
Franklin421482
Chilton4132110
Covington4083115
Tallapoosa3928148
Escambia390375
Dallas3529150
Chambers3523122
Clarke347460
Marion3080100
Pike306776
Lawrence296995
Winston273272
Bibb256961
Marengo248561
Geneva246575
Pickens233359
Barbour227555
Hale218775
Butler213868
Fayette210360
Henry188644
Cherokee182745
Randolph178041
Monroe173440
Washington165938
Macon156949
Clay150556
Crenshaw149557
Cleburne147041
Lamar140034
Lowndes137653
Wilcox124927
Bullock122140
Conecuh109828
Perry107726
Sumter103332
Coosa100228
Greene91434
Choctaw59024
Out of AL00
Unassigned00

Tennessee Coronavirus Cases

Cases: 836563

Reported Deaths: 12096
CountyCasesDeaths
Shelby931861591
Davidson88121924
Knox49873624
Hamilton43438487
Rutherford42361422
Williamson27569216
Sumner23515342
Montgomery19661224
Wilson18496229
Out of TN1793495
Unassigned16772133
Sullivan16211287
Blount15194194
Bradley14633148
Washington14197243
Maury13242169
Sevier13182175
Putnam11185173
Madison10810241
Robertson9615129
Anderson8633171
Hamblen8509171
Greene7739152
Tipton7227103
Coffee6832121
Dickson6735109
Cumberland6577128
Carter6472156
Bedford6430129
Gibson6406144
McMinn637097
Roane6193102
Jefferson6082123
Loudon601969
Lawrence580986
Hawkins5790106
Monroe571495
Warren551581
Dyer5365104
Franklin508988
Fayette492577
Obion450296
Cheatham445254
Cocke444198
Rhea431475
Lincoln430763
Marshall411858
Campbell409962
Weakley403563
Giles395799
Henderson373075
Macon358477
Carroll357682
White355468
Hardin349866
Hardeman346464
Lauderdale314344
Henry312575
Marion310546
Claiborne306173
Scott305345
Overton297461
Wayne294334
Hickman280746
McNairy276854
DeKalb275653
Smith274938
Haywood268361
Grainger259449
Trousdale249022
Morgan246039
Fentress238446
Johnson231738
Bledsoe209911
Chester209451
Crockett201248
Polk200024
Unicoi194849
Cannon188931
Union186234
Grundy178233
Humphreys174222
Lake169526
Sequatchie166928
Benton163140
Decatur157438
Lewis156226
Meigs134724
Stewart130828
Jackson130035
Clay109331
Houston108533
Perry105728
Moore100117
Van Buren83621
Pickett75724
Hancock55112

Community Events