Alphabet Q4 Earnings Highlights: AI, Cloud, YouTube Momentum Continues, $75 Billion CapEx Guidance Spooks Investors

Tech giant Alphabet Inc (GOOGL) has reported its fourth-quarter financial results following the market close on Tuesday.

Here are the key highlights from the report.

Performance Overview: Alphabet announced a total revenue of $96.5 billion for the fourth quarter, marking a 12% increase compared to the same period last year. However, this revenue fell slightly short of Wall Street’s consensus estimate of $96.6 billion, according to data from Benzinga Pro.

The company reported earnings per share (EPS) of $2.15, which surpassed the expected EPS of $2.12.

Alphabet highlighted strong performance across its business segments, with revenues from Google Services up by 10% year-over-year, reaching $84.1 billion. This growth was driven by robust demand for Google Search and YouTube ads.

Notably, Google Cloud also showed impressive growth, with revenue climbing 30% year-over-year to $12 billion.

In detail, the revenue breakdown for the fourth quarter was as follows:

• Google Search: $54 billion (up from $48 billion last year)
• YouTube ads: $10.5 billion (compared to $9.2 billion last year)
• Google Network: $8 billion (down from $8.3 billion last year)
• Total Google Advertising: $72.5 billion (up from $65.5 billion last year)

Additionally, revenue from Google subscriptions, platforms, and devices amounted to $11.6 billion, which is an increase from $10.8 billion in the same quarter last year.

When combining these figures, Google Services generated a total revenue of $84.1 billion, up from $76.3 billion in the previous year’s fourth quarter. For Google Cloud, the revenue of $12 billion reflects growth from $9.2 billion a year ago.

For the entire fiscal year, Alphabet’s revenue reached $350 billion, which is an increase of 14% compared to the prior year.

Future Outlook: Alphabet's CEO, Sundar Pichai, stated that the fourth quarter's success was fueled by advancements in artificial intelligence and overall business momentum. He mentioned, "We are building, testing, and launching products and models faster than ever, making significant progress in our computing capabilities and enhancing efficiencies." Pichai observed robust demand from customers for AI-driven Google Cloud solutions, and noted that YouTube continues to lead in streaming watch time.

He remarked, "Together, Cloud and YouTube ended 2024 with an annual run rate of $110 billion. Our increasing results illustrate the strength of our unique full-stack approach to AI innovation and the sustained success of our core business."

Looking ahead, the company has issued guidance for capital expenditures, projecting $75 billion for the year 2025.

Stock Performance: Following the earnings announcement, Alphabet’s stock experienced a decline of 7%, trading at $191.90 in after-hours trading, which is notable compared to its 52-week range of $130.66 to $207.05. Earlier in the day, shares reached new all-time highs. The stock closed Tuesday with a gain of 2.6%, at $206.38.

Image Credit: Shutterstock.

Alphabet, Earnings, Cloud