Alphabet shares tumbled over 9% in after-hours trading Tuesday after the Google parent company reported fourth-quarter revenue that fell short of Wall Street expectations. The company also announced a significant increase in artificial intelligence investments, committing $75 billion in capital expenditures for 2025—well above the $58.84 billion expected by analysts.
Alphabet reported revenue of $96.47 billion, just missing the $96.56 billion forecast. However, earnings per share came in at $2.15, slightly beating estimates.
While YouTube advertising revenue exceeded expectations at $10.47 billion, Alphabet’s cloud revenue came in lower than anticipated at $11.96 billion. CFO Anat Ashkenazi acknowledged that strong demand for AI products had outpaced the company’s available compute capacity, but assured investors that Alphabet is ramping up infrastructure investments to meet growing demand.
Alphabet’s net income jumped 28% year-over-year to $26.54 billion, but overall revenue growth slowed compared to last year. Google’s ad revenue increased 10.6%, down from 11% in the same quarter last year, while YouTube ad revenue growth also declined to 13.8% from 15.5%.
Another weak spot was Alphabet’s Other Bets segment, which includes self-driving unit Waymo and life sciences firm Verily. The unit reported $400 million in revenue, significantly below Wall Street expectations and down 39% from a year ago.
Despite the revenue miss, Alphabet remains optimistic about its AI strategy, with plans to expand Waymo’s robotaxi service to new U.S. cities and launch international testing in Tokyo. However, investors appear cautious as Alphabet navigates slowing growth and intensifying competition in AI and cloud computing.
