By Deborah Mary Sophia and Zaheer Kachwala
(Reuters) – Alphabet will face an meticulous examination of investors on its massive expenses on AI when it publishes profits on Tuesday, as income growth at Google Parent has probably slowed down in the holiday quarter due to a slowdown in its advertising and cloud companies.
Like the other heavyweights of American technology, Alphabet faces a new examination on its capital expenses after Chinese startups Deepseek launched low cost AI models last month that threaten to push the of AI in a price war.
Alphabet capital expenses have been $ 50 billion for last year, according to LSEG, and more planned for 2025 to support its cloud expansion and IA -focused research features, including summaries, which are essential to the defense of its market share and the attraction of more advertising returned.
The leaders of Microsoft and Meta Platforms defended their strong IA spending plans last week, saying that they were crucial to stay in the new field.
Meanwhile, Google Cloud’s growth is expected to decelerate in the fourth quarter among the high expectations of the segment.
“Although the growth rate (the cloud) should slow down, high investments should continue, but effective gains have so far maintained profits.” Said Susannah Streeter, money and market manager, Hargreaves Lansdown.
Research income and other Google activities should have increased 11.2% in the fourth quarter, according to Visible Alpha estimates, compared to an increase of 12.2% in the third quarter.
Overall, alphabet income should increase by 11.9% to $ 96.6 billion, slower than in the third quarter, according to estimates compiled by LSEG.
The company – whose research and YouTube services are used by more than 2 billion people each month – also tries to keep its dominant share on the research advertising market in the middle of the growing competition of the Amazon electronic commerce company .com and social media applications such as Tiktok.
Spending on higher political announcements around American presidential elections may have helped Google in the fourth quarter, after the owner-owner of Facebook Meta also reported a similar increase in advertising revenues.
However, Meta’s first quarter forecasts aroused concerns about advertising market prospects as economic uncertainty increases with the imminent threat of world rates.
Cloud Focus
Expectations are high for Google’s cloud activities after the segment has won its fastest growth in two years during the September quarter thanks to the increase in IA expenses by companies.
