Google's parent company, Alphabet Inc., reported a 28% increase in earnings during Q4, bolstered by strong digital ad sales, which grew by 11%. However, revenue from the Google Cloud division, crucial for AI initiatives, fell short of expectations, leading to a 6% drop in stock price. Analysts note that while AI enhancements are helping ad sales, questions arise over the massive investments in AI amidst rising competition, particularly from cost-effective solutions developed by rivals like Chinese startup DeepSeek.
The early signs suggest that AI is working for Google. What it does for Google is keep more of the digital experience happening within its search engine.
Alphabet earned $26.5 billion, or $2.15 per share, during last year's final quarter, a 28% increase from the same time during the previous year.
AI-generated summaries that Google has been increasingly displaying in at the top of its search results appeared to be helping to bring in more advertising.
Google also has spending billions of dollars on its AI expansion, a huge investment that some investors are questioning.
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