Alphabet (GOOGL) shares tumbled 8% in pre-market trading on Wednesday following disappointing fourth-quarter financial results. The main reason was the slowdown in cloud service revenue growth, mirroring a recent report from rival Microsoft (MSFT).

Alphabet CFO Anat Ashkenazi attributed the decline to limited cloud infrastructure capacity, emphasizing strong demand. However, investors remain skeptical, especially given the company’s plans to increase capital expenditures to $75 billion in 2025, significantly exceeding market expectations of around $60 billion.

These concerns overshadowed growth in Alphabet’s core businesses: search ad revenue rose 13%, while YouTube ad sales increased by 13.8%. Nevertheless, Wall Street analysts expect downward revisions in revenue and profit forecasts due to the weak cloud segment performance.

JP Morgan lowered its target price for Alphabet shares from $232 to $220, citing three key concerns: a sharp rise in capital expenditures, slowing cloud business growth, and uncertainty over margin expansion in 2025. Pivotal Research Group stated that investors now expect proof that the weak fourth-quarter results were merely a temporary setback.