On Wednesday, February 5, the value of shares of one of the world’s largest technology giants, Alphabet, showed a drop of more than 7% after this company, which owns Google, published information about its earnings for the fourth quarter of 2024, which fell short of Wall Street’s preliminary expectations and announced large-scale spending plans for the ongoing development of artificial intelligence.
It is worth noting that the mentioned negative dynamic of securities has been observed for the second day in a row. Alphabet published information about its earnings for the last three months of 2024 on Tuesday, February 4.
The technology giant’s revenue for the fourth quarter of the past year was recorded at the $96.46 billion mark. This indicator showed an increase of nearly 12% year-on-year. It is worth noting that the company’s revenue for the last quarter of 2023 grew by 13% compared to the reading for the same period in 2022. At the same time, the LSEG forecast stipulated that the technology giant would report that the mentioned figure for the fourth quarter of 2024 would be fixed at the $96.56 billion mark.
Earnings per share for the last three months of the past year amounted to $2.15. The LSEG forecast predicted that this indicator would reach $2.13.
The technology giant’s YouTube advertising segment generated revenue of $10.47 billion in the fourth quarter of 2024. For the same period in 2023, this figure was recorded at the $9.2 billion mark. Analysts surveyed by StreetAccount predicted that revenue from the technology giant’s mentioned activities for the fourth quarter of 2024 would amount to $10.23 billion.
Google Cloud earned $11.95 billion in the last three months of the past year. For the same period in 2023, the corresponding figure was $9.19 billion. Analysts surveyed by StreetAccount predicted that Google Cloud revenue for the fourth quarter of 2024 would be fixed at the $12.19 billion mark.
Traffic acquisition costs for the mentioned period amounted to $14.89 billion. Analysts surveyed by StreetAccount predicted that this figure would reach $15.01 billion in the last three months of the past year.
The technology giant’s operating income for the fourth quarter of 2024 was recorded at the $30.97 billion mark. For the same period in 2023, the corresponding figure was $23.69 billion.
The technology giant’s net income for the fourth quarter of last year was recorded at the $26.53 billion mark. For the same period in 2023, this indicator amounted to $20.68 billion.
Google Network’s revenue for the fourth quarter of 2024 was recorded at the $7.95 billion mark. In the last three months of 2023, the corresponding figure was $8.29 billion.
Google Services revenue for the fourth quarter of 2024 reached $84.09 billion. For the same period in 2023, this indicator amounted to $76.31 billion.
The technology giant’s revenue for the entire year 2024 was recorded at the $350 billion mark. This indicator showed an increase of 14% year-on-year.
The technology giant also announced plans to invest $75 billion in capital expenditures in 2025. The corresponding intentions indicate Alphabet’s desire to continue to expand its strategy in the area of artificial intelligence. Also, in this case, there is an illustrative example of the fact that technology giants rely heavily on machine intelligence. Moreover, the mentioned intentions of Alphabet indicate its willingness to make large-scale financial injections into strengthening its position and moving forward as part of a kind of arms race in the space of the artificial intelligence industry.
It is worth noting that the preliminary FactSet estimate provided that the technology giant would invest $58.84 billion in capital expenditures in the current year. The company’s final plans turned out to be much more ambitious. It is worth noting that huge investments are needed for a high level of competitiveness in the artificial intelligence industry. At the same time, last month, Chinese AI developer DeepSeek demonstrated that in the area of digital intelligence, it is possible to achieve maximum results with minimal expenses. However, this is an isolated example, which is not a clear signal that the artificial intelligence industry as a whole can move forward in its technological evolution without large-scale financial injections.
Alphabet expects its capital expenditures for the first quarter of 2025 to be fixed in the range of $16 billion to $18 billion. FactSet’s preliminary estimate predicted that the mentioned figure would be $14.3 billion for the specified period.
The technology giant capital expenditures were recorded at the $14 billion mark in the fourth quarter of 2024. Analysts surveyed by StreetAccount predicted that this figure would amount to $13.26 billion for the mentioned period.
Alphabet’s chief financial officer Anat Ashkenazi said on an earnings call with investors that capital expenditures primarily reflect the company’s investments in technical infrastructure. She also noted that the largest component of the mentioned indicator is financial injections into servers followed by data centers to support the growth of business across Google, Google DeepMind, and Google Cloud.
Answering a question about whether the revenue of the cloud unit of the technology giant could be higher with an increase in computing capacity, Anat Ashkenazi said that in the fourth quarter of last year, Alphabet recorded significant demand for artificial intelligence products. Also in this context, it was noted that the technology giant exited the year with more demand than it had available capacity.
Anat Ashkenazi stated that Alphabet is currently in a tight situation in terms of matching demand and supply. She stated that the company works very hard to bring more capacity online. It was also separately noted that the technology giant will add more capacity during the current year.
Alphabet’s Other Bets segment, which includes the life sciences unit Verily and the self-driving car unit Waymo, generated revenue of $400 million in the fourth quarter of 2024. For the same period in 2023, this figure amounted to $657 million. Analysts surveyed by StreetAccount predicted that the revenue of the mentioned segment of the technology giant’s business for the fourth quarter of 2024 would be fixed at the $616.4 million mark.
During the last three months of the past year, Alphabet has made several Waymo-related announcements. In this case, the technology giant has demonstrated confidence in its ability to commercialize its self-driving company faster. Waymo’s robotaxi service currently operates in San Francisco, Phoenix, and Los Angeles. The activities of this brand cover more than 500 square miles of public roads. In December, Alphabet announced its intention to launch the mentioned commercial service in Austin in 2025. Separately, the company noted that the specified service will be available to users via the app in the mentioned city and Atlanta in the current year.
Alphabet also plans to start testing Waymo in Tokyo. This will be the first international expansion of the robotaxi service.
Alphabet chief executive officer Sundar Pichai said that the fourth quarter of 2024 was strong for the technology giant and driven by its leadership in artificial intelligence and momentum across the business. He noted that the company is building, testing, and launching products and models faster than ever, and making significant progress in computing and driving efficiencies.
Sundar Pichai also stated that DeepSeek proves what Alphabet has known for a long time. In this case, it means a practical experience that proves the thesis that costs, latency, and performance will continue to improve. Moreover, Sundar Pichai said that Gemini 2.0 Flash and Flash Thinking artificial intelligence models are among the most efficient, including when compared to DeepSeek’s V3 and R1.
Mr. Pichai noted that Google can increase efficiency while improving performance due to its full-stack approach to machine intelligence. The mentioned approach encompasses artificial intelligence infrastructure, research, apps, and platforms. Google focuses on optimization and obsession with cost per equity.
As we have reported earlier, AMD Posts Earnings.
