Alphabet, the parent company of Google, released its fourth-quarter financial results this week. Revenue grew by 12% to $96.47 billion, though it fell short of analysts’ expectations. Google Cloud’s revenue increased by 30% to $11.96 billion, also below investor forecasts. Despite this, Alphabet plans to invest $75 billion in capital expenditures this year to expand computing capacity, placing it between Meta’s $60–65 billion and Microsoft’s $80 billion in spending. Market expectations for Google’s capital expenditures were around $58.84 billion, making this a notable increase.
A significant portion of this investment will go toward developing technical infrastructure, focusing on servers, data centers, and network solutions. In the first quarter alone, Google’s capital expenditures are expected to range from $16 billion to $18 billion, exceeding analysts’ estimates of $14.3 billion. Last quarter, Alphabet’s capital expenditures stood at $14 billion, surpassing the $13.26 billion forecasted. Additionally, the company plans to expand its workforce in cloud computing and artificial intelligence.
Revenue Growth and Market Reactions
Despite revenue growth, Alphabet’s quarterly report disappointed investors. The company’s overall growth rate slowed to 12%, compared to 13% a year earlier. Google’s YouTube, search, and services segments saw slower revenue increases. YouTube, however, earned $10.47 billion, exceeding market forecasts. Meanwhile, Google Cloud generated $11.96 billion in revenue, falling short of the expected $12.19 billion but still marking a 30% increase. The company noted that demand for cloud services exceeded its current capacity.
Google’s advertising revenue grew by 10.6% for the quarter, slightly below the 11% growth seen the previous year. Search revenue increased by 12.5%, compared to 12.7% a year earlier. YouTube’s ad revenue grew by 13.8%, down from 15.5% last year. The services segment saw a 10.2% revenue increase, compared to 12.4% in the previous year. These figures contributed to Alphabet’s stock dropping more than 9% after trading closed. However, Alphabet’s net profit rose by 28% to $26.54 billion in the last quarter, reminds NIXsolutions.
In Alphabet’s “Other Bets” division, which includes Waymo, revenue declined by 39% to $400 million, falling short of analyst expectations. However, Waymo is expanding its autonomous taxi operations, which could boost revenue in the future. Despite some setbacks, Alphabet remains committed to investing in growth areas. We’ll keep you updated as more developments unfold.