Alphabet's Earnings Disappoint Amid Rising AI Competition

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Alphabet, the parent company of Google, reported fourth-quarter earnings that fell short of Wall Street expectations, leading to a more than 6% decline in its stock price. The company posted $96.5 billion in revenue, slightly below estimates of $96.67 billion, despite surpassing earnings per share forecasts with $2.15. According to CEO Sundar Pichai, growth was bolstered by advancements in artificial intelligence, as the company aims to enhance its core business and competitive advantage.

Analysts are increasingly concerned about the heightened competition within the AI sector, particularly from emerging players like China's DeepSeek and OpenAI. According to Emarketer’s Evelyn Mitchell-Wolf, Google faces a “challenging year,” with the potential risk of losing its dominance in search due to shifting consumer behavior and increased antitrust scrutiny.

Alphabet plans to invest approximately $75 billion in capital expenditures in 2025, primarily to expand its AI capabilities. Meanwhile, the recent changes in the company's AI usage policies have sparked debates about its role in national security and technology applications. Additional scrutiny also arises from ongoing antitrust challenges in the U.S. and regulatory actions in China.

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