Tech giant Alphabet, the parent company of Google, posted strong fourth-quarter earnings on Tuesday, with revenue rising 12% to $96.5 billion. However, concerns over artificial intelligence (AI) costs and capital expenditures weighed on investor sentiment, sending shares down as much as 7.5% in after-hours trading.
While Google Cloud revenue grew 30% to $12 billion, it fell short of analyst expectations, raising doubts about its competitiveness in the increasingly fierce cloud and AI infrastructure market.
“Q4 was a strong quarter driven by our leadership in AI and momentum across the business,” said Alphabet CEO Sundar Pichai. “We are building, testing, and launching products and models faster than ever.”
Alphabet also announced plans to invest approximately $75 billion in capital expenditures in 2025, a figure that surprised analysts and underscored the rising costs of AI development. Like its tech rivals, Alphabet is heavily investing in AI across its product ecosystem. In December, it launched Gemini 2.0, its most advanced AI model yet.
The company’s core Google Services segment, which includes Search and YouTube, brought in $84.1 billion in revenue, a 10% year-over-year increase. YouTube ad revenue climbed to $10.5 billion, while Google Search generated $54 billion.
Alphabet’s workforce remained stable at 183,323 employees, reflecting continued cost-control efforts.
However, regulatory challenges loom large in 2025. The company faces two major antitrust cases in the United States over its dominance in search and digital advertising. A U.S. judge has already ruled that Google operates an illegal monopoly in search, raising the possibility of forced restructuring, including the potential sale of Chrome, the world’s leading web browser.
Meanwhile, the UK’s competition watchdog has launched its own investigation into Google’s search dominance and its impact on consumers and businesses. A decision in the U.S. ad tech case is expected in the coming weeks.