Google ad revenues up but lower than expected

While Google’s parent company Alphabet saw strong revenue growth in the last quarter, ad revenues have fallen short of analysts’ estimates.

The tech giant reported ad revenue of $65.52 billion, slightly below the $65.94 billion expected for Q4 of 2023. But this was stronger than the $59.04 billion in Q4 2022.

Alphabet-owned YouTube, which has been helping to drive accelerated growth, also came in just shy of expectations.

Looking at its rivals, Facebook’s ad business is growing faster while TikTok represents a growing threat as younger users turn to the app to create short videos.

Alphabet CEO Sundar Pichai continues to focus on investments in artificial intelligence (AI) and has made cuts elsewhere, including multiple layoffs.

AI investment

“We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud,” Pichai said in a statement. “Each of these is already benefiting from our AI investments and innovation.”

Last year, Google launched a large language model (LLM) called Gemini, which it considers its largest and most capable AI model to date.

While revenue, excluding traffic acquisition costs, was $72 billion versus expectations of nearly $71 billion, investors seemed to focus on the advertising miss with Alphabet’s share price falling up to 6 per cent.

Google said it isn’t concerned that the advancement of AI might disrupt the company’s search products, given that generative AI chatbots change the way people interact with the web.

Pichai said that AI tools expand Google’s arsenal, which offers a breadth and depth of information to users who crave a diversity of sources online.