Google Forecasts $75B in Expenditures as AI Investments Balloon

The numbers $350 billion — Alphabet’s 2024 full year revenue, up 14% from $307 billion in 2023. $96.47 billion — Q4 revenue, up 12% year-over-year, but below analyst projections. As a result, Alphabet shares dropped up to 8% in after-hours trading Tuesday. The company’s Search and Cloud businesses, respectively, represented the biggest contributors to revenue. $84.1 billion — Google Services revenues for the quarter, up 10% from the previous year, thanks in large part to strong growth in Google Search, YouTube ads and other sources of ad revenue. $11.96 billion — Google Cloud revenues for Q4, up 30.1% from the same period last year, due in part to advancements in AI infrastructure. Google secured new Cloud business from major players including Mercedes Benz and Mercado Libre in 2024. The figure still came in under the $12.19 billion expected by Wall Street. $75 billion — Alphabet’s planned 2025 capital expenditures as the company invests more into AI. The watercooler talk AI was, unsurprisingly, a core focus for Google in Q4, and will continue to be throughout 2025. CEO Sundar Pichai underscored three areas of the company’s “full-stack” approach to AI: building leading infrastructure, running “world-class” research programs, and developing cutting-edge products and platforms. Recent AI benchmarks for the tech giant include the debut of Google Agentspace, a platform for custom AI agents for enterprises, and the December announcement of Willow, Google’s quantum computing chip, designed to mitigate errors as it scales. In generative AI, Google unveiled Gemini 2.0 Flash, a high-speed, low-latency model, and VO2 and Imagen 3, its latest video and image generation models. In its search business, Google has launched AI Overviews in more than 100 countries. As AI expenditures rise, Alphabet is tightening spending elsewhere. CFO Anat Ashkenazi, who joined the last July from Eli Lilly, has emphasized cost-cutting as the company ramps up investments in AI. Bracing for potential layoffs, employees this month have reportedly produced an internal petition on job security. Google has offered voluntary buyouts to employees in its Platforms and Devices unit, which spans Android, Pixel, Fitbit, and other products. Google's latest earnings report comes amid mounting legal challenges. The U.S. Justice Department, building on an August ruling that Google holds a monopoly in search, proposed in November a forced divestiture of its Chrome browser. If pursued, the move would mark one of the most significant antitrust actions in tech history. Meanwhile, the company is also the target of an antitrust case concerning its ad tech business. Closing arguments wrapped in November, and Leonie Brinkema, judge on the District Court for the Eastern District of Virginia, is expected to issue a ruling soon. Executives did not comment on either case during Tuesday’s earnings calls. The key quote On a call with investors, CEO Sundar Pichai said: “We are making dramatic progress across compute, model capabilities, and in driving efficiencies. We are rapidly shipping product improvements, and seeing terrific momentum with consumer and developer usage. And we are pushing the next frontiers—from AI agents, reasoning and deep research, to state-of-the-art, video, quantum computing, and more. The company is in a great rhythm and cadence, building testing and launching products faster than ever before. This is translating into product usage, revenue growth, and results.”

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Google Forecasts $75B in Expenditures as AI Investments Balloon

The company also reported a 12% year-over-year lift in revenue, missing Wall Street projections

The numbers

Kendra Barnett

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