Alphabet Stock Dips After Q4 Beat — Big AI Capex Raises Margin Questions

This article first appeared on GuruFocus.

Alphabet (NASDAQ:GOOGL) shares slid about 4% early Thursday after the Google parent posted fourth-quarter results that topped Wall Street estimates but outlined sharply higher spending on artificial intelligence infrastructure.

The company reported earnings of $2.82 a share, ahead of forecasts of $2.64. Revenue rose 18% year over year to $113.83 billion, also above expectations.

Management said it plans to lift capital expenditures to $175 billion to $185 billion to expand AI tools, data centers, and computing systems. Investors appeared cautious, noting that heavier investment could pressure near-term margins.

Google Cloud stood out in the quarter, with revenue climbing to $17.66 billion from $11.96 billion a year earlier, supported by demand for cloud services and enterprise AI products.

Search advertising also showed momentum, with revenue rising 16.7% to $63.07 billion. However, YouTube ad revenue came in at $11.38 billion, below analyst projections, while Google Network and Other Bets posted modest declines.

Market participants are now watching whether Alphabet can sustain cloud growth and roll out AI features across more products, while balancing rising costs with profit expansion.