Google’s corporate parent Alphabet Inc. has delivered strong quarterly results that demonstrate the company’s ability to capitalize on artificial intelligence growth while maintaining dominance in digital advertising. The tech giant’s latest quarterly report shows Google quarterly earnings surpassing analyst expectations, with revenue climbing 18% to $113.8 billion during the October-December period. According to numbers released Wednesday, Alphabet’s fourth-quarter profit rose 30% from the prior year to $34.5 billion, or $2.82 per share.
The results marked Google’s third consecutive quarter of digital advertising growth exceeding 10% year-over-year. Additionally, the division powering data centers for artificial intelligence services posted sales growth of more than 30%, propelling the company well past earnings forecasts from stock market analysts.
Google Quarterly Earnings Driven by AI Investment
The strong performance indicates that Alphabet’s massive investments in artificial intelligence infrastructure are beginning to pay off. According to Alphabet CEO Sundar Pichai, search saw more usage than ever before, with AI continuing to drive an expansionary moment for the company. This momentum has helped drive up Alphabet’s stock price nearly 60% in the past five months, giving it a $4 trillion market value.
However, some investors remain skeptical about whether Google can sustain enough growth to justify its massive capital expenditures. The company disclosed that it will have spent more than $300 billion from 2024 through the end of this year on expanding computing capacity needed for AI features. These concerns caused Alphabet’s shares to fluctuate between slight gains and declines during extended trading after Wednesday’s report came out.
Massive AI Spending Plans Announced
Alphabet revealed Wednesday that it plans to dramatically increase its AI investment in 2025. After pouring $91 billion into capital expenditures devoted mostly to AI infrastructure, the Mountain View, California, company expects to spend another $175 billion to $185 billion this year. This represents a significant escalation from the approximately $30 billion spent annually since 2022, when OpenAI released its ChatGPT chatbot.
According to Ethan Feller, a stock strategist for Zacks Investment Research, Alphabet’s projected budget for capital expenditures represents nearly half of its 2025 revenue of $403 billion, calling the commitment “jarring.” Meanwhile, Investing.com analyst Thomas Monteiro offered a more optimistic view, stating that the past quarter supports the view that Google is spending into strength and differentiation, not spending to stay relevant.
Digital Advertising Revenue Fuels Growth
Google’s thriving digital advertising business continues to finance its AI spending spree. The company’s digital ad sales totaled $82.3 billion in the fourth quarter, up 14% from the previous year. In contrast, Google Cloud, which oversees the data centers behind many AI services, posted revenue of $17.7 billion, representing a 48% increase.
The company is also expanding its AI integration across key products. Google is embedding more of its Gemini AI technology into its long-dominant search engine, Gmail, and Chrome browser as it tries to avoid complacency and being outmaneuvered by up-and-coming competitors such as OpenAI, Anthropic, and Perplexity. Furthermore, Apple recently struck a deal to use Google’s Gemini technology in a long-delayed upgrade to its virtual assistant, Siri.
Legal Challenges Continue
Despite the strong Google quarterly earnings report, the company faces ongoing legal challenges. In 2024, a federal judge condemned its search engine as an illegal monopoly in a case brought by the U.S. Justice Department. The Justice Department initially proposed a breakup that would have required the sale of Google’s Chrome browser.
However, U.S. District Judge Amit Mehta rejected that idea and ordered less severe changes, partly because he believed the rise of AI would help rein in Google. Both the Justice Department and Google are currently appealing that decision, leaving the final outcome uncertain.
