(Feb 5): Alphabet Inc topped projections for quarterly revenue and outlined an ambitious capital spending plan, far surpassing predictions, leveraging its growth to build out the data centres and infrastructure needed to lead in the artificial intelligence (AI) age.
The Google parent said capital expenditures would reach as much as US$185 billion ($235.46 billion) this year, compared with the US$119.5 billion analysts expected. The company’s fourth-quarter sales, excluding partner payouts, were US$97.23 billion, surpassing the US$95.2 billion expected on average by analysts, according to data compiled by Bloomberg.
Chief executive officer Sundar Pichai said the investments are paying off. “We’re seeing our AI investments and infrastructure drive revenue and growth across the board,” he said Wednesday in a statement. “Search saw more usage than ever before, with AI continuing to drive an expansionary moment.” Google Cloud revenue was US$17.7 billion, beating the US$16.2 billion analysts expected.
The shares fell more than 7.5% in after-market trading before recovering.
Google has raced to reinvent its business for the AI age, working to keep consumers in the habit of going to its search page even when they could also go to chatbots from rivals like OpenAI. The company has quickly improved its Gemini model and integrated it throughout its products — an effort that has required massive investment in data centres and chips for model improvement and cloud customers.
The industry has leaned on Google’s progress. Google is supplying up to one million of its specialised AI chips to Anthropic, cementing Google’s position as a key infrastructure provider in the AI space. Gemini will also be a provider of AI for Siri on Apple Inc’s iPhones. The Gemini app has 750 million monthly active users.
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To justify its heavy spending, Alphabet needs to demonstrate momentum in its cloud and search advertising businesses. The company has said its massive investments in AI — funding new infrastructure, research and talent — are essential for competing against rivals including Amazon.com Inc, Microsoft Corp and OpenAI.
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