Alphabet, the parent company of Google, reported sales far from Wall Street’s expectations, weighed the frustrating development of the Cloud-Computing department, which sells the company’s artificial intelligence tools to other businesses.
The Silicon Valley giant reported revenue of $ 96.5 billion in the last quarter, a 12 % increase over the previous year, but except for the $ 96.6 billion awaiting Wall Street analysts. The profit was $ 26.5 billion, a 28 % increase in the $ 26 billion analysts’ estimate.
Google clouds has become a key element of the company’s move to genetic artificial intelligence, the technology that created an explosion of spending on Silicon Valley and beyond. Google Cloud sales were $ 11.96 billion in the fourth quarter, an increase of 30 % compared to the previous year, but less than the $ 12.2 billion awaiting analysts.
The results have asked questions about whether AI will prove to be an advantage for Google Cloud, which remains smaller than competing services than Amazon and Microsoft. Alphabet has invested a huge amount to try to boost AI bids amid investors’ concerns that US companies may spend too much on AI compared to their Chinese counterparts.
The internet giant has announced that it would spend $ 75 billion on capital spending in 2025, from $ 52.5 billion last year, a difference of more than $ 22 billion that could be added to the company’s profits.
The stock of the alphabet decreased to about 7 % in post -purchase transactions.
Company executives said that strong expenses were necessary, in a call with analysts after the results were released. Google Cloud is in greater demand for AI tools than the ability to provide their customers, said Anat Ashkenazi, chief financial director of the alphabet. The company is working hard to bring more capacity to the internet and facilitate limitations, he added.
Mrs Ashkenazi also warned that the growth rates for the Google Cloud section may vary in 2025 as the company continues to buy more equipment and manufacture more facilities. He added that he expected that the capital’s capital costs would be $ 16 billion to $ 18 billion in the first quarter and that the quarterly number would change during the year.
Ai Deepseek’s Chinese launch has caused US markets to set up last week, as the Chatbot application increased in popularity. Deepseek said it is training its system for just $ 6 million, a fraction of technological giants, such as Google Evening. The stock of the alphabet took a blow, among many others, though later recovered. The trusts of the Technology Industry have questioned some of Deepseek’s claims.
Still, the episode emphasized the critical need of the alphabet to get AI right in order to maintain its digital services related to consumers and businesses that were never more damaged for choices. And he added Heft to questions about whether Google should more fully consider the full hug of so -called open source development used by Deepseek and other newly established AI companies.
Google’s disappointing results “Cloud suggest that AI’s impulse can start to decrease exactly as Deepseek’s closed model strategy is called,” writes Evelyn Mitchell-Wolf, a business analyst of business company Emarketer research.
Sundar Pichai, chief executive of the alphabet, congratulates Deepseek’s achievements on the call, but said it was another point of proof that AI would present huge business opportunities in the future. He said that the alphabet is largely investing to serve billions of consumers in all its products and businesses using Cloud technology.
Google’s search engine, considered vulnerable to the shift of AI trends since the Openai chattel took the world from the storm in 2022, has so far been strong. It remains the most popular search product in the world and in the fourth quarter, generated $ 54 billion revenue. Analysts expect $ 53.4 billion.
As the alphabet continues to invest in AI, it has also continued efforts to reduce other spending, including by reducing labor forces. Last week, the company said it offered voluntary acquisitions to employees in its platform and devices, which is responsible for the Web Chrome browser and the pixel smartphones. The company also cut almost two dozen roles on YouTube this week, according to an email seen by the New York Times.
YouTube advertising sales rose by $ 14 % to $ 10.5 billion, over $ 10.2 billion expected by analysts.
