Google’s AI push supercharges growth as Ads, Cloud and Search hit new highs
Google beats Wall Street estimates as AI fuels record search usage, strong ad growth and a surge in cloud revenue, pushing Alphabet’s valuation to USD 4 trillion.
Google’s latest quarterly report has provided further evidence that its vast internet empire is weathering the artificial intelligence shake-up—one that is increasingly turning into another major growth opportunity for the company.
The financial results released on Wednesday marked Google’s third consecutive quarter of digital advertising growth of more than 10 per cent year-on-year. At the same time, the company reported more than 30 per cent sales growth in the division that powers data centres for AI services.
These gains during the October–December period helped Google’s parent company, Alphabet Inc., significantly surpass stock market earnings expectations.
Alphabet beats earnings forecasts with strong Q4 performance
Alphabet’s fourth-quarter profit rose 30 per cent from the previous year to USD 34.5 billion, or USD 2.82 per share. Revenue increased 18 per cent to USD 113.8 billion, underscoring the company’s broad-based momentum.
The combined strength of Google’s core search and advertising businesses, along with its expanding AI operations, highlights how a company born during the late-1990s internet boom is growing even stronger amid a new technology revolution nearly three decades later.
AI driving record search usage
“Search saw more usage than ever before, with AI continuing to drive an expansionary moment,” Alphabet CEO Sundar Pichai said.
Google’s successful evolution has played a key role in lifting Alphabet’s stock price nearly 60 per cent over the past five months, pushing the company’s market valuation to USD 4 trillion.
Investor expectations rise as shares dip slightly
That surge in valuation appears to have raised expectations among investors. Alphabet’s shares slipped 1 per cent in extended trading following the earnings report, despite the strong financial performance.
Apple, which is also valued at USD 4 trillion, has shown confidence in Google’s AI capabilities. The iPhone maker recently struck a deal to use Google’s Gemini technology as part of a long-delayed upgrade to its virtual assistant, Siri.
Gemini AI expansion across Google products
Google is embedding more of its Gemini AI into its flagship products, including its dominant search engine, Gmail and the Chrome browser. This push reflects the company’s effort to avoid complacency and stay ahead of emerging competitors such as OpenAI, Anthropic and Perplexity.
Alphabet’s massive AI spending push
To meet growing competition, Alphabet has embarked on an aggressive spending strategy to expand its AI infrastructure. After investing USD 91 billion in capital expenditures—largely focused on AI—last year, the Mountain View, California-based company is expected to spend even more in the current year.
The company’s annual capital expenditure budget has surged from around USD 30 billion since 2022, when OpenAI’s ChatGPT drew widespread attention and accelerated the AI race.
Digital advertising funds AI growth
Google’s robust digital advertising business continues to bankroll its AI expansion. Digital ad sales reached USD 82.3 billion in the fourth quarter, up 14 per cent from a year earlier.
Meanwhile, Google Cloud, which manages the data centres supporting many AI services, reported revenue of USD 17.7 billion—an increase of 48 per cent year-on-year.
Search usage once again hit record levels, with artificial intelligence continuing to fuel an expansionary phase for the company.