The news: Google parent Alphabet’s Q4 revenues missed expectations for the first time in two years, despite strong growth in cloud and AI-driven products. Its ad revenue growth half of Meta’s (10.5% vs. 21%).

By the numbers:

• Total revenues: $96.5 billion, up 12% YoY, but missing estimates.
• Advertising revenues: $72.5 billion, up 10.5%.
• Google Services revenues: $84.1 billion, up 10% YoY, fueled by growth in Search & YouTube ads.
• YouTube ad revenues: $10.47 billion, up 14% YoY.
• Annual capital expenditures: Alphabet expects to invest $75 billion in 2025, largely in AI and cloud infrastructure.

Key takeaways:

• Search and YouTube remain dominant ad platforms: Despite rising competition, YouTube ad revenues grew 14% YoY, reinforcing its role as a must-buy platform for advertisers. The strength of Search and YouTube ads suggests that Google’s ad business remains quite resilient.
• Google Cloud and AI are central to growth: With 30% YoY growth, Google Cloud remains a key revenue driver, thanks to its focus on AI-powered solutions. This cements Google’s push to position itself as a top competitor to Amazon’s AWS and Microsoft Azure in the AI era.

Looking ahead: The earnings reinforce a clear trend for marketers: Search, video, and AI-driven solutions are where Google is doubling down.

• Google dominated GenAI search destinations in December 2024, drawing 16.5 billion visits—over 30 times more traffic than the next biggest platform, ChatGPT, which saw 517 million visits.
• Despite the rise of AI-first search competitors, Google still drives over 90% of worldwide referral traffic, far surpassing rivals like Bing, ChatGPT, Claude, and Perplexity.
• While AI-driven search tools saw growth, Google’s referral traffic actually increased slightly from August to November 2024, reinforcing its grip on the market.
• Google is expected to maintain over 72% of all US search ad spending by 2026, increasing from 71.7% in 2025, while Microsoft holds just 7.7%.
• YouTube’s strong ad performance suggests brands should continue prioritizing video content, while Google’s AI-powered search tools could change how marketers approach paid search and SEO strategies.

Our take: The revenue miss signals that advertising growth is not infinite—even for Google. With $75 billion in capex planned for AI and cloud, the company is betting big on enterprise solutions. Marketers should watch how AI-powered ad tools, such as Performance Max and Demand Gen campaigns, evolve in 2025.

While Google remains a dominant force in digital advertising, its future success will depend on how well it monetizes AI, keeps advertisers engaged, and stays ahead of regulatory and competitive pressures.