YouTube ad revenue provided a bright spot in an otherwise mixed quarter for Google parent Alphabet.
In the period ended December 31, the tech giant reported revenue of $96.5 billion and earnings per share of $2.15. While those key metrics marked an improvement over the prior-year quarter and were largely in line with Wall Street forecasts, investors reacted badly to lower-than-anticipated cloud revenue and an “accelerated” plan to maintain hefty AI spending.
Cloud revenue of $12 billion grew more slowly than it has in recent quarters, and the 12% growth of total revenue was also the slowest rate since 2023, adding to investor angst.
Shares plunged 6% in after-hours trading as the earnings report was digested by traders, though they have managed 8% growth in 2025 to date despite some loud bearish voices on the Street.
YouTube ad revenue outpaced analysts’ expectations, climbing 14% to $10.473 billion, a new record. The video giant is on a dominant run, registering 11% market share in the most recent Nielsen Gauge report on TV viewership in the U.S., a new high. A high-profile dispute over TikTok, which has been banned by the U.S. government (though President Donald Trump says he intends to restore its U.S. operations) could ultimately benefit YouTube. TikTok users and creators have already begun migrating to YouTube and its Shorts platform.
In its expensive bid to become a major force in AI, Google and its rivals encountered a new threat last month when China’s DeepSeek released results seen as effective at a reported fraction of what U.S. tech giants are pouring into the technology.
CEO Sundar Pichai sounded an optimistic note in the earnings release, saying the company would continue to keep its foot on the gas pedal in its AI push.
“Our results show the power of our differentiated full-stack approach to AI innovation and the continued strength of our core businesses,” he said. “We are confident about the opportunities ahead, and to accelerate our progress, we expect to invest approximately $75 billion in capital expenditures in 2025.”