Attention, ufologists: Nicholson Baker regrets to inform you that your entire movement is easily debunked by investigating Cold War history. At least he eviscerates your extraterrestrial dreams with good cheer and good writing. And he suggests that you bring some proof beyond grainy footage and anonymous sources.

I never got into UFOs. I loved science fiction as a kid, enjoyed buglike space monsters as much as the next person, and in 1967 I read Bill Adler’s book Letters to the Air Force on UFOs with fascination and delight, but the actual documentary evidence on offer has always seemed poor. And the abduction stories, which reached a peak in the late ’80s, were just nuts. Not until recently, though, when I worked on a book about secret Cold War weapons research, did I begin to understand how the saucer madness got started.

On Sept. 4, 1998, computer scientists Larry Page and Sergey Brin took a research project that they had been working on for two years and turned it into a company.

And they called it Google.

Their project, which would later become a subsidiary of Alphabet  (GOOGL) - Get Free Report, became the most popular search engine in the world, capturing roughly 92% of the market.

So much has changed since those final years of the 20th Century. Now, we live in a world where artificial intelligence has moved from science fiction to reality, and companies are competing fiercely for a place in this new landscape.

How this landscape will evolve remains to be seen, but optimism that Alphabet will be a major player helped its shares surge 31% in the past year. 

That's great, but it's been tougher sledding for investors recently. After Google reported fourth-quarter earnings, shares fell by 7%, causing many to wonder what could happen next.

Alphabet's quarterly financial results were solid

Google, a member of the so-called "Magnificent Seven," a basket of tech stocks that includes a who's who of big-time players such as Apple, Microsoft, and Nvidia, posted fourth-quarter earnings on Jan. 30. 

The company reported adjusted earnings of $1.64 per share, up from $1.05 a year earlier, and beating Wall Street's forecast of $1.59 per share.

Revenue totaled $86.3 billion, up from $76.1 billion last year and ahead of the expected $85.33 billion. Ad revenue came to $65.52 billion, short of analysts’ estimates of $65.94 billion.

While the numbers overall looked good, investors were disappointed with ad revenue and increased spending, including rising AI costs.

CapEx driven by infrastructure

"Our results reflect strong momentum and product innovation continuing into 2024," CEO Sundar Pichai told analysts during the company's earnings call. "Last year brought new excitement around gen AI, and I'm proud of how we responded responsibly with deep advances in foundation models and a number of great launches."

Related: What Apple’s stock does after earnings may hinge on this key opportunity

Alphabet's capital expenditure surged 45% to $11 billion, and Chief Financial Officer Ruth Porat said that capital expenditures would be notably larger this year than in 2023.

She said the CapEx spending will be driven "overwhelmingly by investment in our technical infrastructure with the largest component for servers followed by data centers."

Porat also said that Alphabet would incur $700 million in severance-related costs in the first quarter.

Last month, Google laid off a thousand workers in its hardware, voice-assistance, and engineering teams as part of cost-cutting measures. Early last year, the company cut about 6% of its workforce, or 12,000 positions, marking the largest layoff round in its history.

At the time, Google said it was “responsibly investing in our company’s biggest priorities and the significant opportunities ahead.”

Wall Street analysts seem generally positive 

Redburn Atlantic analyst James Cordwell,  who boosted his price target on Alphabet to $165 from $150 and kept a buy rating on the shares, said that the company's results were robust at an aggregate level.

However, he said, investor focus is likely to be on the fact that Search growth was only in line with expectations, which, when combined with capex increasing materially, will likely support the bear case.

Cordwell, however, said he viewed these concerns as overdone.

Jefferies raised the firm's price target on Alphabet to $175 from $170 while keeping a buy rating on the shares. 

Its analysts said that strong ad demand drove accelerating, double-digit growth in Search and YouTube, though results in these segments were "shy of some investor bogeys." 

More From Wall Street Analysts:

• Analyst who correctly predicted crude oil’s rally has a new forecast
• Veteran fund money manager touts 'sleep-well-at-night' stocks
• Top analyst unveils new Tesla stock price target ahead of earnings

Cloud growth re-accelerated but remains below that of Microsoft's Azure cloud computing program. Jefferies said it sees "an upbeat 2024" with a healthy and strengthening ad market plus Al driving Cloud and YouTube momentum.

BMO Capital analyst Brian Pitz raised the firm's price target on Alphabet to $178 from $170 and kept an outperform rating on the shares. 

Pitz said in a research note that the next leg of GenAl growth is likely to come from infrastructure, foundational models, and apps. Given its full-stack offering, Alphabet is one of the best-positioned Al competitors. 

BMO also raised its 2024 earnings call to $6.62 per share, up from $6.21, and its 2025 target to $8.06 per share from $7.49.

Wells Fargo, however, had a different view of Alphabet's results. The firm lowered its price target on the company to $141 from $148 and kept an equal weight rating on the shares. 

Analysts there said they viewed tepid fourth-quarter search growth as mostly an Alphabet-specific issue. 

Negative revisions to search revenues offset a more favorable cost outlook, Wells Fargo added. They noted that operating loss and free cash flow estimates were revised lower. 

Further, the firm sees the combo of decelerating search growth and elevated capital expenditure as difficult for the stock.

Related: Veteran fund manager picks favorite stocks for 2024

This is a change monitoring for https://f-rkn.com/s/academic2ru delivered by deltaFeed

This is a change monitoring for https://www.hottg.com/academic2ru/webview delivered by deltaFeed

TheStreet's J.D. Durkin brings the latest business headlines from the floor of the New York Stock Exchange as markets close for trading Thursday, February 1.

Full Video Transcript Below:

J.D. DURKIN: I’m J.D. Durkin - reporting from the New York Stock Exchange. Here’s what we’re watching on TheStreet today.

Stocks were in the green to close out today's session. The Dow closed up over 350 points, the Nasdaq closed up 1.3 percent, and the S&P closed 1.2 percent higher. This comes as investors continue to react to the Fed holding interest rates steady while indicating that a March rate cut would be unlikely. Markets are now pricing in a 38 percent chance of a rate cut in March.

Separately, investors are looking ahead to the January jobs report out Friday. Wall Street is expecting the U.S. economy to have added 176,500 jobs last month, with the unemployment rate rising to 3.8 percent.

In other news - we know that layoffs have been top of mind in the business world to start 2024, but now we know just how bad it's been. According to a new report by global outplacement firm Challenger, Gray, and Christmas - layoffs in January increased by 136 percent from the month prior. In total, 82,307 workers were let go by U.S.-based employers in the first month of the year, marking the highest number of January layoffs since 2009.

In addition to questions around interest rates and 2024 being an election year, the report says these layoffs are also driven by "broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs."

The financial sector saw more layoffs than any other industry with 23,238 workers laid off. That was followed by the tech sector with almost 16,000 layoffs, and the food production industry which had roughly 6,660 workers let go.

When asked why employees were being laid off, restructuring was the number one response given by employers. And if you’re worried about AI coming for your job, keep in mind that artificial intelligence was blamed for less than one percent of the January layoffs.

That’ll do it for your daily briefing. From the New York Stock Exchange, I’m J.D. Durkin with TheStreet.