Google has been demonstrating impressive growth recently, generating anticipation ahead of Alphabet’s upcoming fourth-quarter earnings report scheduled for Wednesday. Investors are particularly eager to hear about the company’s investments in artificial intelligence (AI), its cloud computing successes, and its significant deal with Apple.
In recent statements, Alphabet anticipates capital expenditures (capex) to soar between $91 billion and $93 billion by 2025, with finance chief Anat Ashkenazi hinting at an even larger increase for 2026. This projection indicates a robust investment strategy, especially in AI, which has become a focal point for investor interest amid maintaining solid business fundamentals.
A critical aspect of this discussion is the performance of Google’s search advertising business, historically the backbone of its revenue. Analysts are assessing whether competitors like OpenAI are gaining ground or if Google continues to thrive. Bernstein analysts recently expressed optimism, highlighting an upsurge in Google’s query volume for the fourth quarter and a notable growth in paid clicks for its advertisers, marking the highest growth since early 2021.
Furthermore, Google’s cloud division has emerged as a major player, facing fierce competition from Amazon and Microsoft. The company reported a 34% year-over-year increase in new cloud customers in the third quarter, with analysts predicting further growth fueled by AI initiatives and strategic partnerships, such as the notable “tens of billions of dollars” deal with Anthropic for compute resources. This partnership is expected to significantly bolster Google Cloud’s expansion, illustrating the growing synergy between AI and cloud services.
Another exciting development is Google’s collaboration with Apple, whereby Google’s Gemini AI models will be integrated into the updated Siri assistant. This deal raises questions about the financial benefits for Google, the use of query data for training Gemini, and the potential utilization of Google’s data centers and TPU chips by Apple. Investors are hopeful for clarity on these details during Wednesday’s earnings call, which could provide crucial insights into the future direction of both companies.
As tech giants continue to invest heavily in AI and cloud technologies, Google seems well-positioned to maintain its momentum and capitalize on these evolving markets, promising promising prospects for growth in the coming years.