Alphabet Inc., Google’s parent company, reported 12% revenue growth in the fourth quarter of 2024, reaching $96.5 billion, driven by AI advancements and strong ad revenue. However, despite the solid earnings, investors reacted negatively, with Alphabet’s stock dropping 7.5% in after-hours trading due to concerns over AI-related costs and slower-than-expected cloud growth.
Google Cloud grew 30% year-over-year to $12 billion, but still fell short of analysts’ expectations, raising doubts about its ability to compete in the highly competitive 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.”
AI Investments and Rising Costs
Alphabet plans to invest $75 billion in capital expenditures in 2025, a move that surprised analysts and highlighted the growing costs of AI development. Like other major tech firms, the company is aggressively integrating artificial intelligence across all its products.
In December 2024, Alphabet launched Gemini 2.0, its most advanced AI model to date, signaling its commitment to leading the AI race.
Advertising and Core Business Performance
Alphabet’s core Google Services segment, which includes Search and YouTube, posted revenues of $84.1 billion, a 10% year-over-year increase.
• Google Search revenue: $54 billion
• YouTube advertising revenue: $10.5 billion
Despite rising investments, Alphabet’s workforce remained steady at 183,323 employees, reflecting ongoing cost-control measures.
Regulatory Challenges Loom
Alphabet faces two major U.S. antitrust cases, with regulators scrutinizing its dominance in search and ad technology. A U.S. judge has already ruled that Google operated an illegal monopoly in search, and the company could face potential restructuring, including the possible sale of Chrome, the world’s leading web browser.
Additionally, Britain’s competition watchdog recently launched an investigation into Google’s search market dominance and its impact on businesses and consumers.
A decision in the U.S. ad tech case is expected in the coming weeks, adding more uncertainty to Alphabet’s future.
