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Alphabet is planning to spend big again this year, sending shares down

Feb 04, 2025 - businessinsider.com
Alphabet, Google's parent company, reported its fourth-quarter earnings, revealing a 12% growth in consolidated revenue to $96.5 billion. The company exceeded expectations on earnings per share at $2.15 but fell slightly short on revenue projections. While Google advertising and YouTube advertising revenues surpassed estimates, Google Cloud revenue was below expectations. The announcement of a higher-than-anticipated capital expenditure forecast of $75 billion for 2025, compared to the $57.9 billion expected by analysts, contributed to a more than 7% drop in Alphabet's shares during postmarket trading.

Despite challenges, Alphabet remains committed to its AI investments, with CEO Sundar Pichai highlighting the company's leadership in AI and ongoing product development. This focus on AI continues to bolster investor optimism, even as the industry faces competition from China's DeepSeek, which has introduced a cost-effective open-source AI model. Alphabet's strategic emphasis on AI, including projects like its AI assistant Gemini, underscores its efforts to maintain a competitive edge in the tech industry.

Key takeaways:

  • Alphabet reported a 12% growth in consolidated revenue for the fourth quarter, reaching $96.5 billion, but missed revenue expectations.
  • The company beat earnings per share estimates with $2.15 compared to the expected $2.13.
  • Alphabet's Cloud Services sales fell slightly short of expectations, contributing to a 7% drop in postmarket trading.
  • Despite industry disruption from China's DeepSeek, Alphabet continues to heavily invest in AI, planning $75 billion in capital expenditures this year.
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