Google’s latest quarterly results, released Wednesday, pointed to Alphabet’s core businesses—search and advertising—remaining resilient even as the company ramps up spending for artificial intelligence infrastructure. The report showed Alphabet posting fourth-quarter profit of $34.5 billion, a 30% increase from the same period a year earlier, and revenue of $113.8 billion, up 18%. The earnings add to the momentum Alphabet has been reporting as it leans further into AI-related products and services.
Alphabet said its digital advertising sales totaled $82.3 billion in the fourth quarter, representing a 14% rise from the prior year. In the same quarter, Google Cloud reported revenue of $17.7 billion, up 48% year over year, as the company continues to sell data-center capacity used for AI services. The combined performance from ads and cloud helped lift the parent company’s results above what analysts had forecast, according to the report.
Alphabet Chief Executive Sundar Pichai said, “Search saw more usage than ever before, with AI continuing to drive an expansionary moment.” The company’s AI push also includes embedding more of its Gemini artificial intelligence into products such as its long-running search engine, as well as into Gmail and the Chrome browser, as it looks to avoid being outmaneuvered by rivals including OpenAI, Anthropic and Perplexity.
The report also framed Alphabet’s progress as unfolding alongside a larger shift in technology spending. The company said it has been on a spending spree to expand its AI capacity, disclosing that it poured $91 billion into capital expenditures devoted mostly to AI. Alphabet then outlined plans to add more, forecasting it expects to spend another $175 billion to $185 billion this year, describing the move as a continuation of its infrastructure buildout for AI features.
Investors, however, remain cautious about whether Alphabet’s AI-related capital spending will translate into sustained growth at a pace sufficient to justify the scale of the spending. The report said some investors question whether Alphabet can sustain enough growth to support more than $300 billion that Alphabet is expected to spend from 2024 through the end of this year on computing capacity for AI, with shares showing fluctuations during extended trading after the results.
The earnings are also arriving as Alphabet faces scrutiny in U.S. court over its search business. The report said it appeared Alphabet could have faced a major setback in 2024 after a federal judge condemned Google’s search engine as an illegal monopoly in a case brought by the U.S. Justice Department. It said the Justice Department had proposed a breakup that would have required the sale of Google’s Chrome browser, but U.S. District Judge Amit Mehta rejected that plan and ordered less severe changes, in part because he believed AI’s rise would help rein in the company; both the Justice Department and Google are appealing that decision.
Beyond its own platforms, Alphabet’s AI ambitions are also intersecting with other consumer technology. The report said Apple struck a deal to use Google’s Gemini technology in a long-delayed upgrade to its virtual assistant, Siri, highlighting how Alphabet’s AI partnerships are expanding even as it competes in a fast-moving field.