Alphabet Faces AI Push, Regulatory Hurdles Ahead of Q4 Earnings

PARIS, France — Alphabet Inc., Google‘s parent company, is set to report its fourth-quarter earnings Tuesday, with Wall Street closely watching its performance amid a year marked by artificial intelligence advancements, regulatory challenges, and cost-cutting measures.

Analysts expect Alphabet to report an 11% revenue growth, driven by its aggressive push into AI and the commercialization of its self-driving car unit, Waymo. The company has expanded Waymo’s robotaxi service to Los Angeles, San Francisco, and Phoenix, covering over 500 square miles of public roads. Waymo also announced plans to launch commercial services in Austin and through the Phoenix airport in 2025, with testing set to begin in Tokyo.

However, Alphabet’s focus on AI infrastructure has come with significant costs. CEO Sundar Pichai emphasized the need for cost savings in the third quarter, leading to employee concerns about job security. In December, employees circulated an internal petition titled “job security” after rumors of layoffs surfaced. Last week, Alphabet began offering buyouts to U.S. employees in its Platforms and Devices unit, which includes over 25,000 full-time workers.

Regulatory challenges also loom large. The U.S. Department of Justice in November called for Google to divest its Chrome browser, alleging the company holds a monopoly in the search market. The DOJ argued that breaking up Google would level the playing field for competitors. During a December town hall, Pichai acknowledged the urgency of the moment, stating, “It’s really important we internalize the urgency of this moment, and need to move faster as a company. The stakes are high.”

Despite these hurdles, Alphabet’s stock reached $200 per share in January, reflecting investor optimism about its AI opportunities. However, the emergence of a Chinese AI competitor last month has raised questions about how Alphabet will maintain its edge in the rapidly evolving AI landscape.

As Alphabet prepares to release its earnings, analysts will be looking for insights into its AI strategy, cost-cutting measures, and plans to navigate increasing regulatory scrutiny.