Image Credit: Bloomberg

Google’s parent company, Alphabet (GOOG, GOOGL), released its fourth-quarter earnings on Tuesday, surpassing expectations on earnings per share but aligning closely with revenue forecasts.

However, the company fell short in its crucial cloud revenue segment. Additionally, Alphabet announced a significant increase in capital expenditures for the coming year, raising its planned investment from $57.9 billion to $75 billion.  

The earnings report coincides with China’s decision to launch an antitrust investigation into Google, widely interpreted as a retaliatory move following President Trump’s 10% tariff on Chinese-made goods.  

Alphabet is also facing competitive pressure from China-based DeepSeek’s AI models, which recently made headlines for their cost efficiency and comparable capabilities to Silicon Valley’s leading AI technologies.  

Meanwhile, advertising competitor Meta (META) exceeded Wall Street’s expectations in its earnings report last week but refrained from providing full-year guidance. Both Meta and Alphabet are heavily investing in AI to enhance ad sales and user engagement.  

For the quarter, Alphabet reported earnings per share (EPS) of $2.15 on revenue of $96.4 billion, narrowly beating analyst projections of $2.13 EPS but slightly missing the expected $96.6 billion revenue. Advertising revenue reached $72.4 billion, surpassing estimates of $71.7 billion. However, Google Cloud revenue came in at $11.9 billion, falling short of Wall Street’s $12.1 billion forecast.  

Cloud growth remains a key focus for Alphabet as it competes with Amazon (AMZN) and Microsoft (MSFT) for market share. Microsoft’s cloud revenue rose 21% year over year to $40 billion in its latest quarter, though it missed Wall Street’s $41.1 billion target, leading to a dip in Microsoft’s stock.  

Alphabet, like Meta, is also closely watching developments surrounding TikTok in the U.S. The short-form video platform was initially set to shut down its U.S. operations last month, but it remains active as President Trump explores alternatives to an outright ban.

Regulatory challenges persist for Alphabet. The company is appealing a ruling that found it had abused its monopoly power in the search market. Government lawyers have even suggested a potential breakup of the company, though investors have largely dismissed the likelihood of immediate structural changes.  

Over the past year, Alphabet’s stock has surged 41%, outpacing Amazon’s 39% gain and significantly outperforming Microsoft’s modest 2% increase.

Paraphrasing text from "Yahoo!Finance" all rights reserved by the original author