Alphabet Inc. (GOOGL - Get Report) shares traded lower in Frankfurt Tuesday after the Google parent posted solid quarterly results but hinted that rising costs could slow profit margin improvements.

Alphabet's 'A'-listed shares that trade on the Frankfurt Stock Exchange under the symbol ABEA were marked 2.17% lower at €834.5 for 50 units, according to Deutsche Boerse data, down €18.53 each from their Monday close. Alphabet shares closed at $998.31 each in New York, prior to the company's second quarter earnings release, and were quoted 2.94% lower in after-hours trading.

Alphabet said revenue jumped 21% to $26.01 billion from the same period last year, beating Wall Street's expected $25.6 billion estimate, while earnings came in at $5.01 per share, firmly ahead of the projected $4.44 tally.

However, the better-than-expected results were seemingly overshadowed by the company's total traffic acquisition costs (TAC), which increased to $5.091 billion and now represent 22% of Google's advertising revenue. A record $2.74 billion antitrust charge handed down by the European Commission last month after the watchdog said Alphabet favored its own shopping services over rivals also kept investors from extending the stock's 25% year-to-date gain.

"There's not really much of an update there as we're still early in our analysis of the decision of the right next steps," Google CFO Ruth Porat said Monday on a conference call with investors. "We do have time to notify the Commission for proposed remedies as well as to implement changes."

She also added that "we do expect TAC costs to increase" and noted the group is focused on "dollar growth ... not margins."

Paid clicks on Google's ads rose 52% from the year earlier, while Wall Street expected paid clicks to jump 37.2% year-over-year. That's an increase from the prior quarter, where paid clicks increased 44%. Cost per clicks, a key metric that measures the average price each click, continued to fall during the quarter. Total cost per click slid 23% year-over-year, which was greater than analysts' projected decline of 16.4%.

"Overall, we are encouraged by the strong quarter despite the discouraging click trend," said Jim Cramer's Action Alerts PLUS team. "We believe GOOGL can be successful with its diversification away from advertising, but we understand the business represents the heart of its business and the process will take time."

"While the company may see short-term weakness immediately following its report, we do not believe it will be sustained as the company continues to deliver and improve on its long-term objectives," the AAP team noted. "However, we do recognize the click concerns moving forward and we will update members accordingly should we believe it to be a larger part of the company's story."

Alphabet is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells GOOGL? Learn more now.  

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