Alphabet will be under investor scrutiny for its significant investment in AI when it announces earnings on Tuesday. Revenue growth for the Google parent company likely slowed in the holiday quarter due to a decrease in advertising and cloud business. Like other major U.S. tech companies, Alphabet faces pressure on its capital spending after a Chinese startup introduced low-cost AI models that could lead to a price war in the industry. Alphabet’s capital expenditure was estimated at $50 billion last year, with further investments planned for 2025 to support cloud expansion and AI-driven search features. Microsoft and Meta Platforms executives have defended their substantial AI spending as essential for staying competitive in the field.
Google Cloud growth is expected to slow in the fourth quarter, despite high expectations for the segment. Revenue from Google’s Search and Other business is forecasted to have increased by 11.2% in the fourth quarter, a slight slowdown from the previous quarter. Overall, Alphabet’s revenue is projected to grow by 11.9% to $96.6 billion, slower than the third quarter. The company, whose services are used by over 2 billion people monthly, is striving to maintain dominance in the search advertising market against competitors like Amazon and TikTok.
Google’s cloud business is anticipated to perform well following strong growth in the September quarter due to increased AI spending by businesses. Despite concerns about a potential slowdown, Alphabet’s shares have risen this year as investor confidence in its AI strategies grows. Following Microsoft’s recent lackluster performance, investors will be watching to see if Google faces similar challenges, particularly in balancing AI growth with core cloud services.
Google Cloud is expected to report a 32% revenue increase in the fourth quarter, surpassing Microsoft’s 31% growth and Amazon’s estimated 19% rise. The company’s focus on AI investments and cloud expansion will be key areas of interest for investors during the earnings announcement.
The text could be rewritten as: based in Bengaluru; Edited by Shounak Dasgupta.
