Google’s Digital Ad Sales Continue to Grow, But AI-Related Revenue Falls Short
Google’s digital ad sales continued to grow during the holiday season, but the company’s big bet on artificial intelligence (AI) did not yield the expected results.
The company’s parent, Alphabet Inc., released its quarterly earnings, showing a 28% increase in profits to $26.5 billion, or $2.15 per share, compared to the same time last year. Revenue rose 12% to $96.5 billion, exceeding analyst forecasts.
However, the revenue growth in the Google Cloud division, which is closely tied to AI, was not as robust as expected. This led to a more than 6% drop in Alphabet’s stock price after the numbers were released.
Despite this, Google’s ad sales climbed 11% to $72.5 billion, exceeding analyst estimates. The company’s AI-generated summaries, displayed at the top of its search results, appear to be helping to bring in more advertising.
However, Google’s investment in AI expansion is a significant concern for investors. The company is spending billions of dollars on AI, and some investors are questioning the value of this investment after a Chinese startup found an effective way to deploy similar technology at a fraction of the cost.
Google is also facing a regulatory crackdown in the US, which could impact its revenue. A federal judge has declared Google’s search engine an illegal monopoly, and the company is facing potential punishment, including being forced to sell its Chrome web browser.
In addition, Google is awaiting a ruling in an antitrust trial in Virginia revolving around the technology underlying its digital ad network. The company is also facing a ruling on the barriers protecting its Play Store for Android smartphone apps, which is currently on hold while Google appeals.
Overall, while Google’s digital ad sales continue to grow, the company’s big bet on AI is not yielding the expected results, and investors are questioning the value of this investment.
