Google’s parent company Alphabet on Tuesday reported revenue jumped in the recently-ended quarter, but shares sank on concerns it may be pouring too much money into artificial intelligence.
Google and rivals are spending billions of dollars on data centers and more for AI, while meaningful returns on investments remain elusive and the rise of lower-cost model DeepSeek from China raises questions about how much needs to be spent.
“We are pushing the next frontiers from AI agents, reasoning and deep research to state-of-the-art video, quantum computing and more,” Alphabet chief executive Sundar Pichai said during an earnings call.
“The company is in a great rhythm and cadence, building, testing, and launching products faster than ever before.”
Pichai said this is translating into increased use of its products, including AI search summaries that are now available in more than 100 countries.
Alphabet said revenues jumped 12 percent to $96.5 billion in the quarter, but the company’s share price sank more than 7 percent in after-hours trading as investors were disappointed by lower-than-expected revenue growth and the company’s ambitious capital spending forecast for 2025.
Google Cloud revenue, while growing 30 percent to $12 billion, fell short of expectations, raising questions about the division’s ability to compete with rivals in the heated AI infrastructure market.
“Q4 was a strong quarter driven by our leadership in AI and momentum across the business,” Pichai said.
“We’ll continue to invest in our cloud business to ensure we can address the increase in customer demand.”
Pichai added that Google is working on “even better thinking models” that it will share with developers soon.