When Google parent company Alphabet reports earnings Tuesday (Feb. 4), it is reportedly likely to face questions from investors about the amount it is spending on artificial intelligence (AI).
The company is estimated to have spent $50 billion on AI in 2024 and is expected to spend more in 2025, Reuters reported Monday (Feb. 3).
Tuesday’s earnings report is expected to show that the company’s revenue growth slowed during the past quarter due to a slowdown in its advertising and cloud businesses, the report said.
In addition, January saw the launch of low-cost AI models by Chinese startup DeepSeek, which may cause a price war in the AI industry, per the report.
The combination of challenges to revenue growth and elevated investment in AI is likely to lead to scrutiny by investors during the earnings call, according to the report.
Other companies investing in AI have faced similar questions.
During Meta’s Wednesday (Jan. 29) earnings call, CEO Mark Zuckerberg said it is too soon to tell whether the innovations of DeepSeek’s lower-cost AI model mean it’s time to reduce AI infrastructure spending.
“It’s probably too early to really have a strong opinion on what this means for the trajectory around infrastructure and capex,” Zuckerberg said.
Days earlier, on Jan. 24, Zuckerberg said on his Facebook page that Meta is investing $60 billion to $65 billion in capital expenditures. That’s up from $38 billion in 2024. Zuckerberg said more computing power is needed for Meta AI, the company’s AI assistant that has been deployed in its social media and devices and is now serving over a billion people.
Microsoft held an earnings call Thursday (Jan. 30) in which CEO Satya Nadella said that “DeepSeek has had some real innovations” but that the AI industry has become more efficient and lowered prices as well.
When the cost to use deployed AI models (inference) comes down, “that means people consume more, and there will be more apps written,” Nadella said. “That type of optimization means AI will be much more ubiquitous.”
“Therefore, for a hyperscaler like us, a PC platform provider like us, this is all good news as far as I’m concerned,” Nadella said.