Google parent Alphabet saw its shares drop significantly following the release of its fourth-quarter earnings report for 2024. While the company reported strong earnings growth, its revenue fell short of Wall Street expectations. The company reported a revenue of $96.47 billion for the fourth quarter, marking a 12% year-over-year increase from $86.31 billion in the same period the previous year. However, this figure came in slightly below analysts’ estimates of $96.56 billion.
Despite the revenue miss, Alphabet’s earnings per share (EPS) exceeded expectations, coming in at $2.15 compared to the anticipated $2.13. The company’s net income rose sharply to $26.54 billion, marking a growth of 28% from the $20.69 billion reported in the same quarter a year earlier. Operating income also showed a healthy uptick, growing by 31% to amount to $30.97 billion for the three months ended December 2024. For the entire fiscal year, Alphabet’s revenue amounted to $350 billion, while its net income and diluted EPS for the same period amounted to $100 billion and $8.04 respectively.
“Q4 was a strong quarter driven by our leadership in AI and momentum across the business. We are building, testing, and launching products and models faster than ever, and making significant progress in compute and driving efficiencies. In Search, advances like AI Overviews and Circle to Search are increasing user engagement. Our AI-powered Google Cloud portfolio is seeing stronger customer demand, and YouTube continues to be the leader in streaming watchtime and podcasts. Together, Cloud and YouTube exited 2024 at an annual revenue run rate of $110 billion. Our results show the power of our differentiated full-stack approach to AI innovation and the continued strength of our core businesses. We are confident about the opportunities ahead, and to accelerate our progress, we expect to invest approximately $75 billion in capital expenditures in 2025,” Sundar Pichai, Alphabet CEO, commented on the matter.
For the first quarter of 2025 alone, Alphabet expects capital expenditures to range between $16 billion and $18 billion, surpassing the $14.3 billion forecasted by analysts. In the fourth quarter of 2024, Alphabet’s capital expenditures totaled $14 billion, slightly above the $13.26 billion estimated by analysts.
Google’s advertising segment, which remains the largest contributor to Alphabet’s overall revenue, reported $72.46 billion in revenue for the fourth quarter. This represented a year-over-year increase of 10.6%, slightly below the 11% growth recorded during the same period in 2023. Revenue from Google Search, a key component of Google’s advertising business, rose by 12.5% (narrowly missing the 12.7% growth rate achieved in the previous year) to amount to $54 billion for Q4 2024. For the same period, YouTube advertising revenue reached $10.47 billion, surpassing analysts’ expectations of $10.23 billion. However, this marks a slowdown from the 15.5% growth recorded in the fourth quarter of 2023, as YouTube ad revenue increased by 13.8% year over year to reach $10.473 billion (exceeding the $10 billion mark for the first time).
Similarly, Alphabet’s Google Cloud division, which has been a focal point of the company’s growth strategy, reported revenue of $11.96 billion for the fourth quarter. This marked a 30% increase from the previous year but fell short of Wall Street’s expectations of $12.19 billion. Alphabet’s Other Bets segment, which includes ventures such as the life sciences unit Verily and the autonomous driving unit Waymo, continued to struggle in the fourth quarter. The segment reported revenue of $400 million, significantly below the $616.4 million expected by analysts and a sharp decline from the $657 million reported in the same quarter the previous year. The segment also posted a loss of $1.17 billion, compared to a loss of $863 million in the fourth quarter of 2023.
“We had strong demand for AI products in the fourth quarter and exited the year with more demand than we had available capacity,” Anat Ashkenazi, Alphabet CFO, commented on the matter during the earnings call, adding that the company is “in a tight supply-demand situation.”
