By Princewill Okike
Advertising revenue for YouTube provided some optimism for Alphabet in an otherwise mixed quarter for Alphabet, Google’s parent company.
YouTube ad revenue climbed 14% to $10.473 billion. The company said the boost in ad revenue came from U.S. election spending in 2024, as well as subscription revenue from services like YouTube TV or YouTube Premium.
Google recorded slower revenue growth in its most recent quarter. During the final quarter in 2024, Alphabet reported revenue of $96.5 billion and earnings per share of $2.15.
The numbers marked an improvement compared with the prior year, but cloud revenue missed expectations and the company’s outlook was higher than expected for expenditures.
Alphabet and Google Chief Executive Officer Sundar Pichai said the company will increase its investments in data centers that power AI, both for his company and clients of its cloud-computing business. He said Google will likely spend about $75 billion on capital expenditures this year, compared with $52.5 billion in 2024.
Google’s AI Overviews that displays on many search results at the top of the page seems to have brought in advertising. Google’s ad sales climbed 11% from the previous year to $72.5 billion to exceed analyst estimates.
Google’s cloud-computing division underperformed Wall Street expectations in the quarter, reporting $12 billion in sales — up 30.1% from the same period a year earlier.
There is instability at Google. In the U.S. the company is preparing to defend against a breakup the federal government is seeking after a judge in 2024 found it to have a monopoly in online search. And this week the company was hit with an antitrust investigation in China, a likely retaliation for new tariffs that U.S. President Trump wants to impose on goods and services coming from that country.
“YouTube stood out, benefitting from positive viewership trends,” Evelyn Mitchell-Wolf, senior analyst at E-marketer, wrote in an email. “Google Search finished strong even as search results pages are rearranged around AI Overviews.”
Mitchell-Wolf explained that the cloud’s disappointing revenue results suggests AI-powered momentum might be beginning to wane just as Google’s closed model strategy — rather than open source — is called into question by Deep-Seek, an open-source AI search engine from China that managed to train its model for much less.
Google also has been faced with growing competition from OpenAI ChatGPT Search, as well as a goal set my Pichai to reach 500 million users for Google’s Gemini chatbot by the end of the year.
