Alphabet's Q4 Earnings: Cloud Revenue Misses, Capital Expenditures Surge
Earnings:
* EPS: $2.15 (beat by $0.02)
* Revenue: $96.4 billion (roughly in line)
Segment Revenue:
* Advertising: $72.4 billion (beat by $0.7 billion)
* Google Cloud: $11.9 billion (missed by $0.2 billion)
Key Developments:
* Alphabet significantly increased its capital expenditures for the year ahead, from $57.9 billion to $75 billion.
* China launched an antitrust investigation into Google, seen as a retaliatory measure against US tariffs.
* AI rival DeepSeek demonstrated cheaper and equally capable AI models.
Competitor Performance:
* Meta (META) exceeded expectations in its earnings report last week and is investing heavily in AI.
* Microsoft (MSFT) saw its cloud revenue grow 21%, but still missed Wall Street estimates.
* Amazon (AMZN) remains a major cloud competitor.
Regulatory and Legal Risks:
* Google is appealing a court ruling finding it abused its monopoly power in search.
* A potential breakup of the company has been suggested by government lawyers, but the market has not reacted strongly to this possibility.
Investment Performance:
* Alphabet shares have outperformed Amazon and Microsoft over the past 12 months, rising 41%.