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 a miss on cloud revenue and a higher-than-expected outlook for capital expenditures.
Shares plunged 6% in after-hours trading as the earnings report was digested by traders.
YouTube ad revenue outpaced analysts’ expectations, climbing 14% to $10.473 billion as the video giant continued its run of dominance. In the most recent Nielsen Gauge report on TV viewership in the U.S., YouTube hit 11% market share, its highest level yet. A 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 benefit YouTube longer term as TikTok users and creators have already begun flocking to YouTube and its Shorts platform.
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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.”
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