Alphabet will report its quarterly earnings on Tuesday, with investors focusing on its AI spending and the impact of slower growth in advertising and cloud revenue.
Estimates compiled by LSEG indicate that Alphabet’s revenue for the fourth quarter is expected to rise 11.9% to $96.6 billion, lower than the previous quarter’s growth.
Capital expenditure for 2024 is estimated at $50 billion, with additional spending planned for 2025 to support cloud expansion and AI-driven search features. The company’s AI investments come amid competition from new entrants, including Chinese startup DeepSeek, which launched low-cost AI models last month.
Google Cloud revenue is projected to increase by 32% in the fourth quarter, down from the 35% growth recorded in the previous quarter. Microsoft’s Azure cloud business reported a slowdown in growth in the December quarter, raising concerns about whether Google Cloud will face similar challenges.
Alphabet’s Search and Other business revenue is expected to increase by 11.2%, following a 12.2% rise in the third quarter, according to Visible Alpha estimates. The company continues to compete with Amazon and social media platforms like TikTok for search advertising market share.
Political ad spending around the U.S. presidential election may have contributed to higher ad revenue in the fourth quarter. However, Meta’s cautious first-quarter outlook has raised concerns about the broader advertising market, as economic uncertainty and potential global tariffs remain factors.
Alphabet’s shares have risen about 7% this year after gaining 35% in 2024, reflecting investor interest in AI-related growth. Analysts will assess whether Google Cloud’s AI services can sustain growth without affecting its core cloud computing business, as seen in Microsoft’s recent earnings report.
