GOOGLE'S RISING HOLIDAY'S SEASON AD SALES AREN'T ENOUGH TO EASE WORRIES ABOUT AI LETDOWN

Google's digital ad sales continued to grow at a healthy clip during the holiday season, but that wasn't enough to offset investors' worries about whether its big bet on artificial intelligence will be lucrative as once envisioned.

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The October-December results released Tuesday by Google parent Alphabet Inc. showed the company is continuing to reap even more profits from its dominant search engine and other peripheral services.

Alphabet earned $26.5 billion, or $2.15 per share, during last year's final quarter, a 28% increase from the same time during the previous year. Revenue rose 12% from the previous year to $96.5 billion. The earnings eclipsed analyst forecasts of $2.13 per share, but the revenue fell slightly below projections, according to FactSet Research.

More importantly, revenue growth in the Google Cloud division tethered to the AI craze wasn't as robust as had been anticipated.

That letdown contributed to a more than 8% drop in Alphabet's stock price after the numbers came out. The downturn reversed a recent rally that had elevated Alphabet's shares to a new all-time high earlier Tuesday during the regular trading session.

"The reaction underscores concerns that rivals like Microsoft, with its OpenAl partnership, are better positioned to convert AI hype into revenue," said Investing.​com analyst Jesse Cohen.