Alphabet announced a massive $75 billion investment in AI, exceeding expectations, but investors expressed concern over missed revenue targets and profitability.
Alphabet announced on Tuesday a staggering $75 billion investment in artificial intelligence (AI) for the current year, a 29 percent surge surpassing Wall Street's projections of $58 billion. This significant increase, primarily allocated towards building servers and data centers, has elicited mixed reactions from investors.
While Alphabet CEO Sundar Pichai emphasized the vast opportunities presented by AI and the potential for cost reductions, investors expressed disappointment over a missed cloud revenue target and growing concern about profitability. Consequently, Alphabet's stock plunged 9 percent in after-hours trading, despite a 9 percent gain for the year.Pichai defended the substantial investment, stating that Google's Gemini AI models demonstrate comparable efficiency to China's DeepSeek, a rival AI offering competitive pricing. He asserted that declining usage costs will unlock new applications and capitalize on the immense opportunity presented by AI. However, Alphabet's financial report revealed a slowdown in cloud revenue growth, partly attributed to capacity constraints within its AI offerings.This deceleration in cloud revenue growth, coupled with the substantial capital expenditure plans, has raised questions about Alphabet's financial strategy. Investors, already apprehensive about the company's profitability, are now scrutinizing the long-term implications of this heavy investment in AI. While Alphabet remains optimistic about the future potential of AI, the market seems to be questioning its ability to translate this investment into sustainable profitability and outpace competitors in a rapidly evolving landscape
ALPHABET AI INVESTMENT CLOUDREVENUE PROFITABILITY DEEPSEEK GEMINI
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