Alphabet Inc. Reports Mixed Q4 2024 Earnings, Stock Drops
Alphabet Inc., the parent company of Google, reported its fourth-quarter earnings for 2024, revealing a mixed financial performance that led to a significant drop in its stock price. The company’s shares fell as much as 9% in after-hours trading following the earnings release, driven by a revenue miss and higher-than-expected capital expenditure plans for 2025.
Alphabet’s revenue for the quarter reached $96.47 billion, slightly below the $96.56 billion expected by analysts. Earnings per share, however, beat estimates at $2.15 compared to the anticipated $2.13. Despite the overall revenue growth of nearly 12% year-over-year, the company faced slower growth in key segments, including search, YouTube ads, and its services unit. Google’s advertising revenue grew by 10.6%, down from 11% a year ago, while YouTube ads revenue growth slowed to 13.8% from 15.5% in the same quarter last year.
A major point of concern for investors was Alphabet’s cloud revenue, which came in at $11.96 billion, missing Wall Street’s expectation of $12.19 billion. Although the cloud unit’s revenue increased by 30% year-over-year, the miss highlighted challenges in meeting demand for AI-driven products. CFO Anat Ashkenazi noted that the company faced a “tight supply-demand situation” and is working to bring more capacity online throughout the year.
Alphabet also announced plans to invest $75 billion in capital expenditures in 2025, significantly higher than the $58.84 billion expected by analysts. This investment is aimed at expanding its artificial intelligence infrastructure, including servers and data centers, to support growth across Google Services, Google Cloud, and Google DeepMind. The company’s Q4 capital expenditure was $14 billion, exceeding the $13.26 billion forecast by Wall Street.
The earnings report also revealed weaker-than-expected performance in Alphabet’s Other Bets segment, which includes ventures like Verily and Waymo. The segment reported revenue of $400 million, down 39% from the same quarter last year and well below the $616.4 million expected by analysts.
Despite the challenges, Alphabet’s net income for the quarter increased by more than 28% to $26.54 billion, up from $20.69 billion a year prior. However, the combination of a revenue miss, disappointing cloud performance, and aggressive spending plans for 2025 has left investors cautious about the company’s near-term outlook. As a result, Alphabet’s stock price declined sharply, reflecting concerns over its ability to balance growth with rising costs in a competitive AI landscape.
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