Google's parent company, Alphabet Inc., reported strong growth in digital ad sales during the holiday season, with $26.5 billion in earnings for Q4, a 28% increase. Revenue rose 12% to $96.5 billion, surpassing earnings projections but falling short of revenue forecasts. While Google's advertising benefited from AI enhancements, the anticipated growth in the Google Cloud division was disappointing, leading to a stock price drop. Despite this, analysts see potential in AI's impact on advertising, although there are doubts about the high costs associated with these AI initiatives.
"The early signs suggest that AI is working for Google," said Jim Yu, CEO of BrightEdge, which helps websites rank higher in search results.
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.
More importantly, revenue growth in the Google Cloud division tethered to the AI craze wasn't as robust as had been anticipated.
But Google also has spending billions of dollars on its AI expansion, a huge investment that some investors are questioning after the Chinese startup DeepSeek found an effective way to deploy similar technology at a fraction of the cost.
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