Alphabet's Stock Drops Despite Big Plans

Alphabet, the big boss behind Google, had some disappointing news recently. The company's stock took a hit after it didn't meet the money expectations for the last three months of 2024. Even though they made a lot of money, investors were hoping for more. The tech giant brought in $96. 5 billion for the quarter, which is a 12% jump from the same time last year. They also made $2. 15 per share, a big 31% increase from the previous year. But, Wall Street had their sights set on $96. 7 billion in revenue. Investors expected $26. 2 billion in profit and $2. 13 per share in earnings. Alphabet's CEO, Sundar Pichai, was optimistic. He highlighted the company's big strides in AI, even mentioning investments in AI-powered Google Cloud solutions. Mercedes-Benz was one of the customers who showed strong interest in these solutions. However, the market wasn't as impressed. After the quarterly report, Alphabet's stock dropped by more than 7% in after-hours trading. This drop came after the stock had grown by 2. 5% during regular trading. In 2025, the market's focus will be on tariffs, interest rates, and market volatility. These factors can greatly affect investment decisions. Alphabet plans to spend a whopping $75 billion on capital expenditures in 2025. But the market is wondering if this spending will pay off quickly enough. Some experts think that AI investments are a big reason for the high capital expenditures. Bank of America analysts were expecting Alphabet to meet or even beat the fourth-quarter expectations, mostly from the advertising business. They also think Wall Street might be underestimating the potential of AI Overviews to boost search monetization in 2025. Dave Heger, an analyst at Edward Jones, believes Alphabet is well-positioned for long-term growth. He thinks the company can deliver solid results across its search, YouTube, ad-tech, and cloud-computing businesses. The key is integrating AI into these services. In December, Google introduced Gemini 2. 0, its most advanced AI model yet. Gemini 2. 0 has features that allow it to work with images and audio. The company hopes this will help them build new AI agents, moving closer to their vision of a universal assistant. Meanwhile, Demis Hassabis, the founder of Alphabet's drug discovery subsidiary, Isomorphic Labs, shared some exciting news. He said that AI-designed drugs could be heading to clinical trials by the end of the year. Hassabis believes that AI applied to science goes beyond language models. Overall, Alphabet is making big investments and seeing some success in AI, but the market is waiting to see if these investments will result in quick returns.