Alphabet achieves first $100B annual profit ... and sees its shares sink

Google’s parent Alphabet has achieved $100 billion in annual net income for the first time.

News of all those zeroes came in the mega-corp's fourth-quarter and full-year 2024 financial results, which recorded $96.5 billion in Q4 2024 revenue and $350 billion for the full year, representing year-on-year gains of 12 percent and 14 percent respectively.

CEO Sundar Pichai characterized the results [PDF] as "a strong quarter driven by our leadership in AI and momentum across the business."

Google Services – ads, Android, Chrome, hardware, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube – booked $84.1 billion for the quarter, up ten percent year-over-year. Alphabet attributed the growth to enthusiasm for Google Search and YouTube ads.

Google Cloud – Google Cloud Platform and Google Workspace – reached almost $12 billion revenue in Q4, a 30 percent jump from Q3 2023’s $9.2 billion.

Overall net income increased to 28 percent to $26.5 billion for the quarter, and reached $100.12 billion for the full financial year. That’s a 35.7 percent jump from FY 2023’s $74.8 billion.

Earnings per share (EPS) rose 31 percent to $2.15, beating analyst expectations of $2.13. Even so, Alphabet stock slipped in after-hours trading. Its shares were down about seven percent at the time this story was filed.

Perhaps that was because the year-over-year quarterly revenue growth of 12 percent was a few percentage points lower than the improvement reported in FY 2024’s first three quarters. Google Cloud revenue was also a little shy of expectations as growth slowed to 30 percent, five percentage points less than it was in Q3 2024.

A further mover of after-market sentiment may have been Google's capital expenditures, largely driven by its commitment to AI and the costly data center infrastructure required to run it. "We are confident about the opportunities ahead, and to accelerate our progress, we expect to invest approximately $75 billion in capital expenditures in 2025," said Pichai.

During Q1 2024, CFO Ruth Porat estimated Alphabet capex would be $12 billion, so around $48 billion for the year. Pichai’s remarks suggest 2025 capex will grow by half this year. DeepSeek’s debut raised doubts about how much hardware is needed to build and run artificial brainboxes, while few vendors have shown AI demonstrably boosts their bottom lines. Investors are therefore nervous about whether capex will deliver return on investment.

Another issue for Alphabet is China opening an antitrust investigation into Google in the wake of the Trump administration's announcement of an extra 10 percent import tax on goods from China.

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Alphabet's Other Bets – the company’s collection of speculative ventures – fared poorly, with year-over-year Q4 losses rising from $863 million to $1.17 billion, while revenue dropped to $400 million from $657 million in FY 2023’s final quarter. The main sources of revenue for Other Bets are life healthcare outfit Verily and the GFiber internet service operation.

Alphabet-related activities – a category that includes severance costs for employee layoffs and office space – cost $2.8 billion in Q4, down from $3 billion during the same period in 2023. More layoffs are expected and Google employees recently petitioned for job security.

In what might be taken as an effort to make its stock more appealing, Alphabet added a quarterly dividend of $0.20 per share to its capital return program, and authorized $70 billion in share repurchases. ®