Alphabet, the parent company of Google, has announced robust financial results for Q4 2023, surpassing expectations in both revenue and profit. The net profit for the quarter rose to $20.7 billion, a significant increase from the previous year’s $13.6 billion. The fourth-quarter revenue also experienced a 13% surge to $86.3 billion. However, the positive report was overshadowed by a decline in shares as advertising revenue fell short of expectations.
CEO Sundar Pichai, during the earnings call, emphasized the strong momentum and ongoing product innovation, particularly in AI, subscriptions, and cloud investments. The majority of Alphabet’s revenue comes from Google ads, with advertising revenue reaching $65.5 billion in Q4, marking an 11% growth.
Despite the dip in shares, Pichai expressed optimism about the future, mentioning the upcoming Gemini era and the continued benefits from AI investments. Notable highlights include the growth of Google’s search revenue by 12.7% to $48 billion and YouTube’s ad sales increasing by 15.5% to $9.2 billion in Q4.
Google Cloud Platform, Alphabet’s cloud-computing unit, reported increased revenue to $9.2 billion, with a notable profit of $864 million, contrasting with a loss in the previous year. CFO Ruth Porat highlighted the strong demand for the AI portfolio, stating that it creates new opportunities for Google Cloud across various product areas.
Pichai provided insights into Google’s latest AI model, Gemini, and the company’s commitment to responsibly investing in data centers to support AI-powered services. He also discussed efforts to reengineer the cost base and improve efficiency within the organization.
Alphabet’s employee count decreased to 182,502 by the end of 2023, reflecting efforts in product prioritization and organizational design. Porat noted a slower pace of hiring, with a focus on top technical and engineering talent.
The company reported employee severance and related charges of $2.1 billion for the twelve months ending December 31, 2023. Porat highlighted a substantial capital expenditure of $11 billion in Q4, driven by investments in technical infrastructure, particularly in servers and data centers. Looking ahead, the company anticipates larger investments in capital expenditure in 2024 to support growth opportunities.
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