The jump in expenses are most likely causing Google's decline after earnings. But I think the real reason is Google's lack of transparency.
There was impressive top line growth, but how is that broken down? They need to break down display and mobile.
They can not keep touting the impressive growth of these businesses and give vague answers like "we tripped into $1Billion". Analysts are left to estimate the breakdown of mobile an display from these vague statements. The vagueness causes uncertainty, which causes a discount. (Vague answers are forgiven only if numbers beat. If numbers don't beat, the stock gets punished 30points :)
The fact remains, the macro conditions for display and mobile are in-place for Google to benefit. The linked video has Schimdt highlighting the potential.
A few key fundamental changes that took place with the current quarter:
1. Cash positions is $112/share
2. ex-cash, at a price of $548, GOOG's trailing PE is 15.4
For a company that grew top-line by +27%, that just seems way too cheap for the businesses. (It is now as inexpensive as AAPL, ex-cash, even when factoring in anti-trust concerns or a new CEO.)
Technically, GOOG at 548 (AH price) is at the weekly 50 SMA.
To me that is very unrealistic, and the market will be extremely inefficient. Market action is already entering the state of inefficiency with the AH decline.
I do not know yet if a negative market psychology (from easing QE or slowing global growth) could drag GOOG to the $500 levels. (If it does, and I am hoping it does, I will enter GOOG heavily.)