Alphabet’s Q4 earnings show its ‘Other bets’ are finally making progress

Google is undoubtedly the cash-spewing machine for its parent company, Alphabet. However, Alphabet’s other bets including Nest, Google Fiber and the life-sciences unit Verily, have also showed improvements by jumping to $262 million in revenue in the fourth quarter from $150 million a year ago.

Alphabet reported earnings for its fourth quarter and beating the Wall Street expectations, the company generated more than $26 billion, up 22 percent over the same quarter last year. Wall Street was expecting around $25 billion.

“Our growth in the fourth quarter was exceptional,” chief financial officer Ruth Porat said in a release. “This performance was led by mobile search and YouTube.”

The 'Other bets' showed improvement not only in revenue but also in losses. Compared to last year's $1.2 billion in Q4 2015, the losses recoiled to around $1.1 billion in the fourth quarter this year. This category generated $809 million in 2016 up 82 percent vs 2015, as per Porat.

Alphabet will “continue to calibrate the magnitude and pace” of its investments in other bets, and “exercise careful stewardship over the amounts and pace of investments,” Porat said.

With the latest earnings report, "Alphabet is showing signs that it needs to push forward into areas that it knows best and where it can dominate." That’s including Google cloud and rolling out its self-driving car unit into a new company Waymo.

Meanwhile, Google’s earnings with Play, Cloud and Hardware were up 62 percent to $3.4 billion in the fourth quarter, from $2.1 billion in the same quarter a year earlier. Critics were expecting $25.22 billion in revenue, whereas the company reported a revenue of $26.06 billion. Considering the mixed results, analysts are expecting developments for Google beyond search.