What you need to know
- Alphabet sees a 12% revenue increase year-over-year in Q4 2024.
- CEO Sundar Pichai says this was a strong quarter "driven by our leadership in AI and the momentum across the business."
Alphabet, Google's parent company, announced a 12% revenue increase year-over-year to $96.47 billion in Q4 2024. The company's revenue at the end of its fiscal year totaled $350 billion, a 14% increase year-over-year.
The company's shares fell nearly 7% after the trading day Tuesday.
Operating income was $30.97 billion, up from $23.69 billion in the same period last year. Net income was reported at $26.53 billion, up from $20.68 billion in the same period from the previous year.
Google Service's revenues increased to $84.1 billion in the quarter, a 10% increase from the same period a year ago. The company said this is a reflection of "strong momentum across Google Search & other and YouTube ads."
The company’s CEO, Sundar Pichai, said in the earnings statement that the quarter was strong "driven by our leadership in AI and the momentum across the business."
"We are building, testing, and launching products and models faster than ever, and making significant progress in compute and driving efficients," he said.
"In Search, advances like AI Overviews and Circle to Search are increasing user engagement. Our AI-powered Google Cloud portfolio is seeing stronger customer demand, and YouTube continues to be the leader in streaming watchtime and podcasts."
According to a report from Investopedia, Bank of America analysts told clients that based on Meta's strong results last week (where most of its plans were on AI spending), Alphabet also has positive momentum.
Analysts from BoA and Raymond James indicate that because of the boom of DeepSeek, Google may "push the tech giant to act with greater urgency on AI developments."
Pichai did not respond directly to the increase of interest in DeepSeek or its launch but addressed that Google has been working hard to push development on its AI.
"I think, you know, part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down, which will make more use cases feasible. And that's the opportunity space, you know, it's as big as it comes. And that's why you're seeing us invest to meet that moment," he noted during the earnings call.
An email from Investing.com indicated the company saw a shortfall in its earnings "driven by slower Google Cloud growth," which highlights the "challenges of scaling its enterprise business amid fierce competition from Amazon's AWS and Microsoft's Azure."
While the company has been pushing forward with AI investments, the drop in the market after hours "reflects investor disappointment."
"The street is demanding clearer timelines on when AI spending translates to earnings and sales growth, not just promises. The reaction underscores concerns that rivals like Microsoft, with its OpenAI partnership, are better positioned to convert AI hype into revenue. For Alphabet to reassure investors, it needs to demonstrate that its AI bets, from Gemini models to Workspace integrations, can reignite Cloud momentum while core advertising remains stable in an uncertain economy," the note read.
When asked how AI can be monetized in the future, Pichai indicated that the company has very good ideas for native ad concepts and will give people options over time, but that this year, Google will stay focused on the subscription direction.
