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Alphabet, the parent company of Google, witnessed a significant drop in its share price following disappointing sales figures from its cloud computing division, raising concerns about the company’s substantial investments in artificial intelligence.
The tech giant’s cloud computing segment, which provides services to businesses adopting AI technology, reported a 30 per cent increase in revenue to $12 billion for the fourth quarter, falling short of analysts’ projections of $12.19 billion. This performance indicates a noticeable deceleration from the previous quarter’s 35 per cent growth.
The market response was swift, with Alphabet’s shares declining $13.71, or 6.6 per cent, to $194 in after-hours trading. This downturn comes amid growing scrutiny of Silicon Valley companies’ massive AI investments and their ability to generate returns, particularly as competition intensifies globally.
The competitive landscape has become more challenging with Chinese start-up DeepSeek’s recent launch of an AI chatbot that reportedly rivals US models at a fraction of the development cost.
Sundar Pichai, Alphabet’s chief executive, remained optimistic, highlighting the company’s AI leadership and overall business momentum. He announced plans for approximately $75 billion in capital expenditure for 2025, demonstrating the company’s commitment to future growth despite current market concerns.
While Alphabet’s overall revenue increased by 12 per cent to $96.5 billion, it marginally missed consensus forecasts of $96.7 billion. However, the company’s net income showed stronger performance, rising 28 per cent to $26.5 billion, surpassing expectations of $26.1 billion.
The Google Services division delivered a positive performance with revenues climbing 10 per cent to $84.1 billion, exceeding estimates of $83.8 billion, driven by robust growth in Google Search and YouTube advertising revenue.
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