Google’s parent company Alphabet on Tuesday reported revenue jumped in the recently-ended quarter, but shares sank on concerns it may be pouring too much money into artificial intelligence.
The company, along with its competitors, is spending billions on AI-related infrastructure, including data centers, while the rise of lower-cost AI models, such as DeepSeek from China, raises questions about these expenditures.
CEO Sundar Pichai emphasized Alphabet’s progress, highlighting advancements in AI agents, quantum computing, and video technology.
He noted that AI-driven products, like AI search summaries, are now available in over 100 countries. Despite the positive outlook, Alphabet’s ambitious spending plans, including a forecasted $75 billion in capital expenditures for 2025, sparked concerns among analysts.
Google Cloud revenue grew by 30% to $12 billion but fell short of expectations, raising doubts about its ability to compete with rivals in the rapidly growing AI infrastructure market.
Pichai reaffirmed Google’s commitment to investing in its cloud business to meet rising customer demand.
Alphabet’s core Google Services, including search and YouTube, generated $84.1 billion, up 10% year-over-year. YouTube ad revenue reached $10.5 billion, while Google Search earned $54 billion.
Pichai also highlighted progress in its autonomous car division, Waymo, noting its robotaxi service averages 150,000 trips weekly, with plans to expand to Austin, Atlanta, and Miami.
The company’s workforce remained stable at 183,323 employees, reflecting ongoing cost-control measures. However, Alphabet faces significant challenges, including two major US antitrust cases concerning its dominance in search engines and ad technology.
The US government has already ruled that Google operates an illegal monopoly in search, and the company could face forced restructuring. Additionally, the UK competition watchdog launched its own investigation into Google’s market dominance.
Despite these issues, Google’s core ad business has maintained steady growth amid a turbulent landscape, as the company continues to invest heavily in AI and other innovations.
