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Alphabet actions have dropped sharply after slowing down the growth in Google Parent’s cloud activity and plan to spend $ 75 billion this year to strengthen the capacity of artificial intelligence products.
Late Tuesday, Alphabet Two -digit increases reported in the revenues and profits of the fourth quarter, drawn by his main advertising business. But investors have hosted in a disappointing quarter for its large cloud unit, which manages Google’s data centers.
THE cloud division posted a 30% increase in income to almost $ 12 billion, but it was slower than the growth rate of 35% in the previous three months, and less than 12.2 billion dollars than analysts had planned. Financial director Anat Ashkenazi blamed this to “more demand than what we had the capacity available”.
However, the extent of google AI expenses to meet this demand surprised the market. Capital spending on the fourth quarter increased to $ 14.3 billion, compared to $ 11 billion last year and exceeding expectations of $ 13.2 billion.
Google Director General Sundar Pichai said spending on data centers and servers would accelerate $ 75 billion this year, compared to $ 53 billion in 2024 and a third more than Wall Street had estimated it.
“The cost of use actually [AI] will continue to descend, which will make the use more extraordinary uses feasible, ”said Pichai, denying that the company passed in a thoughtful way. “It is the opportunity space. It is as big as possible, and that is why you see us investing to meet this moment. “”
Alphabet shares have dropped up to 8% of exchanges after opening hours, leaving it on the right track for the fifth worst day of negotiation in the last decade and wiping around 200 billion dollars in its market capitalization. However, the stock had previously increased by 45% in the last 12 months, which enhanced it 2.5 tn of dollars behind Apple, Microsoft, Nvidia and Amazon.
The fall of the alphabet echo That of Microsoft last week, which also lost $ 200 billion in market value after also missing the Cloud growth estimates and said that IA expenses would reach $ 80 billion during its fiscal year ending on June 30. On the same day, the meta-PDG Mark Zuckerberg promised to spend “hundreds of billions more to stay at the forefront of AI research.
The reaction of the market reflects wider concerns concerning spending on American groups which build and exploit the vast data centers filled with advanced chips that they affirm are necessary to train and manage language models.
The sale of alphabet is also based on doubts sown last month by a new model of the Chinese start-up Deepseek, who claimed to realize comparable performance For us, AI leaders, including Google Gemini, Openai Chatppt and Anthropic Claude on a Bustring Budget using much less advanced Nvidia chips.
Pichai said Deepseek had a “great team” that had shown “you can drive a lot of efficiency to serve them [AI] Really good models ”.
He also answered analysts’ questions on the question of whether gemstones and rivals cannibalize his basic research activity, because users are using more and more chatbots to find online information and responses, avoiding need Click on advertisements that support its free service.
There is still little evidence that its dominant search engine is still disputed. Research advertising revenues increased by 13% to $ 54 billion in the quarter, beating estimates, supported by another quarter of advertising growth in YouTube.
Overall, group income increased by 12% to $ 96.5 billion in the fourth quarter compared to the same period of three months a year earlier. By excluding the costs of acquiring traffic paid to advertising partners and devices, this figure was $ 81.6 billion, lacking Wall Street estimates of $ 82.8 billion in a Bloomberg survey. Net profit increased 28% to $ 26.5 billion.
Google is also in the reticle of regulators around the world. The company faces the prospect of being breeze After losing a historic case carried by the United States Ministry of Justice, which led to a decision that his research activity had engaged in monopolistic behavior.
This week, it appeared that China had relaunched antitrust surveys on Google’s Android mobile operating system, going down to a Beijing office in a decision that was interpreted as a lever effect in tariff negotiations with US President Donald Trump.
