Google’s quarterly results paint a picture of an internet powerhouse getting stronger in AI age

SAN FRANCISCO (AP) — Google’s latest quarterly report provided more evidence that its internet empire is enduring a rough patch artificial intelligence The shakeup turns out to be another potential boon for the company.

The figures released Wednesday marked Google’s third straight quarter of digital ad growth of more than 10% from a year earlier, while it also posted sales growth of more than 30% at its division that powers data centers for artificial intelligence services.

These gains in the October-December period caused Google’s corporate parent Alphabet Inc. to far exceed stock analysts’ earnings estimates.

Alphabet’s fourth-quarter profits rose 30% year over year to $34.5 billion, or $2.82 per share, while its revenue rose 18% to $113.8 billion.

The collective momentum of Google’s core business in search and advertising and the nascent field of artificial intelligence shows that a company born during the internet boom of the late 1990s grew even stronger during another technology phenomenon nearly 30 years later.

“As AI continues to expand, search has seen more use than ever before,” said Alphabet CEO Sundar Pichai.

Google’s successful evolution has helped Alphabet’s stock price soar nearly 60% in the past five months, giving it a market cap of $4 trillion. Even so, some investors are still skeptical about whether Google can sustain enough growth to justify the more than $300 billion it will spend from 2024 to the end of this year to expand the computing capacity needed for Alphabet’s AI features. Those concerns caused Alphabet shares to swing between slight gains and declines during extended trading following the release of Wednesday’s report.

AppleGoogle, now worth $4 trillion, values ​​its AI so much that the iPhone maker recently agreement reached Using Google’s Gemini technology in a long-delayed upgrade to its virtual assistant Siri.

Google is also embedding more of its Gemini AI into its platform. long dominant search engine, Gmail And Chrome browser as it tries to avoid complacency and being left behind through maneuvers by promising companies such as OpenAIAnthropic and Confusion.

To meet this challenge, Alphabet is on a spending spree to expand its AI capacity. After spending $91 billion on capital expenditures mostly devoted to artificial intelligence, the Mountain View, California-based company said Wednesday it expects to double this year by spending another $175 billion to $185 billion. The capex budget has risen from nearly $30 billion a year since 2022, when OpenAI launched its ChatGPT chatbot to critical acclaim, leaving Google doing everything it can to catch up.

Alphabet’s projected budget for capital expenditures represents nearly half of its $403 billion in revenue in 2025, said Ethan Feller, chief equity strategist at Zacks Investment Research. It’s a “staggering” commitment.

But Investing.com’s Thomas Monteiro said last quarter it “supports the view that Google is spending to strengthen and differentiate, not to stay relevant.”

Google’s booming digital advertising business is helping fund the spending spree. Digital ad sales reached $82.3 billion in the fourth quarter, up 14% from the previous year. Google Cloud, which controls the data centers behind many artificial intelligence services, generated $17.7 billion in revenue, up 48%.

It appeared that a federal judge could face a potentially major setback for Google in 2024. condemned search engine as illegal monopoly In a lawsuit filed by the U.S. Department of Justice. To curb Google’s abuses, the Justice Department proposed a separation that would require the sale of its Chrome browser.

But U.S. District Judge Amit Mehta rejected this idea and ordered less drastic changesin part because he believes the rise of artificial intelligence will help rein in Google. Both the Department of Justice and Google are appealing this decision.