Alphabet (NASDAQ: GOOG) is a leading tech company behind global platforms like the Google search engine and Google Cloud. On Tuesday, February 4, 2025, after markets closed, the company released its Q4 fiscal 2024 results to a negative market reaction. Let us examine the giant tech company’s Q4 results.
Alphabet Q4 Results
For the fourth quarter of fiscal 2024, Alphabet reported revenue of $96.47 billion, missing estimates of $96.56 billion. It reported an EPS of $2.15, narrowly beating estimates of $2.13.
By segment performance, Google Search remains its top source of revenue at $54.03 billion. YouTube ads brought in $10.47 billion in revenue, beating estimates of $10.23 billion. Meanwhile, Google Cloud revenue came in at $11.96 billion, below estimates of $12.19 billion. The company reported traffic acquisition costs (TAC) of $14.89 billion, beating estimates of $15.01 billion.
Fourth quarter revenue was up 12% year over year, compared to the 13% reported in the same period last year. Segment growth was also lower, with Google ad revenue increasing 10.6% YoY compared to 11% a year ago. Meanwhile, Search revenue was up 12.5% YoY compared to 12.7% the previous year, while YouTube ad revenue growth was 13.8% YoY compared to 15.5% the previous year. Its services business saw a 10.2% YoY increase in revenue, slower than the 12.4% reported the previous year.
Alphabet announced fourth quarter dividend payments to holders of Class A, B, and C stock were $1.2 billion, $172 million, and $1.1 billion, respectively for a total of $2.4 billion.
Increased AI Spending
In the earnings report, Alphabet CEO, Sundar Pichai, praised the company’s “leadership in AI.” He added the company was “building, testing, and launching products and models faster.” The CEO stated that the company’s Google Cloud AI products had seen huge demand. Pichai added that they plan to spend around $75 billion in the AI sector to accelerate their progress in 2025.
Alphabet Teases Entry Into the Defense Industry
A joint blog post by Google senior VP James Manyika and Google DeepMind CEO Demis Hassabis, released on Tuesday, February 4, 2025, made the case for the company’s potential entry into the defense industry. Previously, Alphabet had released guidelines for AI use, which included a section about avoiding use cases that could “cause harm.”
The blog post argues that democratic governments and businesses should partner on AI projects that protect people, promote growth, and support national security.
This could signal Alphabet’s entry into the global defense sector, where its AI products could be used for surveillance and defensive capabilities. With its larger resources, it could push out relatively small firms like Palantir that are making their name in the defense sector with AI products.
Alphabet (GOOG) Stock Performance
Following the mixed Q4 results and the planned expenditure of nearly $75 billion on AI developments, GOOG share fell 6.84% in pre-market trading to $193.50 as of 6:17 AM EST. The stock is up 23.34% in the past six months and 44.71% in the past year.
GOOG shares have underperformed the overall Communication Services industry in the last six months, which is up 25.76%. However, it has outperformed it in the past 12 months, where it is up 36.74%. GOOG shares have outperformed the S&P 500, which is up 12.93% in the past six months and 21.77% in the past 12 months.
Analysts are optimistic about the stock’s future, giving it a strong buy rating. They forecast an average price of $223.29, which is a 7.50% upside based on the last closing price. Their highest price forecast is $240, while the lowest is $210.
Should You Add GOOG Shares To Your Portfolio?
While GOOG shares suffered a huge setback due to Tuesday’s earnings report, they are still cheaper than competitors META, and AMZN. While GOOG has a forward P/E of 23.04, META, and AMZN shares have a forward P/E of 27.47, and 38.02, respectively.
Additionally, Alphabet AI products could soon make their way into defense and surveillance products, which could significantly boost revenue in the medium term. Consequently, adding GOOG to your portfolio now could potentially pay off in the medium and long term.
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