Shares in Alphabet, the parent group which owns Google, fell by close to 2% in after hours trading in New York to $832 at one point last night after it announced its latest quarterly earnings of 9.36 per share, about 30c per share lower than average market expectations.

The company said higher taxes, increased spending on data centres – some here in Ireland – and buying content for YouTube had reduced margins.

Earnings per share might have been lower than expected, but Alphabet’s revenues surged by more than 20% during the quarter while operating profit rose by 8% to $5.3bn.

Alphabet Chief Financial Officer Ruth Porat commented, "We see tremendous potential ahead for these businesses, as well as in the continued development of non-advertising revenue streams for YouTube."

"Our growth in the fourth quarter was exceptional -- with revenues up 22% year on year and 24% on a constant currency basis. This performance was led by mobile search and YouTube," he added.

The company's 'cost-per-click' fees for advertisers fell by 16%, year-on-year.

These results come as the company makes a shift towards hardware production, as its Pixel phone hopes to take on Apple and it also delves into the worlds of virtual reality and smart homes.

Alphabet reports that its effective tax rate is close to 19%.