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Technology
February 12, 2025

Uncertain skies ahead for Google

Hi Enthusiast,

Walgreens is skating on thin ice: the company is being sued for using digital smart screens on its fridge panels, but it's also being sued for not using them, as it tries to back out of a deal to install more Cooler Screens in its stores. It's a tough spot to be in.

US stocks surged yesterday, bouncing back after a smooth, drama-free session. Following a rough start to the week, traders were relieved by a day without new tariff threats. The S&P 500, Nasdaq 100, and Russell 2000 all posted solid gains. Although President Trump's 10% tariffs on Chinese imports and China’s retaliatory measures took effect, the market largely shrugged them off, and US stocks with significant exposure to China saw gains.

Google's cloud sales fail to impress, despite bold spending plans

Alphabet's stock took a dive after the company reported quarterly revenue that fell short of Wall Street's expectations. While cloud sales showed growth both year-over-year and quarter-over-quarter, the $11.96 billion generated still missed analysts' forecast of $12.16 billion for its AI-driven cloud division. The real bombshell came when CEO Sundar Pichai revealed the company plans to spend a whopping $75 billion on capital expenditures in 2025, far exceeding the expected $57.9 billion. This continues the trend of major tech players ramping up capital spending, with Broadcom set to benefit as a key AI chip supplier to Alphabet.

Looking at Alphabet's overall performance, the company saw a 14% year-over-year revenue growth in FY 2024, reaching $350 billion. Key revenue figures for Q4 included: YouTube’s ad revenue up 13.8% to $10.5 billion, Google Cloud bringing in $12 billion (a 30% YoY increase), search revenue reaching $54 billion (up 12.5%), and Google ad revenue climbing 10.6% to $72.4 billion.

The Bottom Line:

While the cloud sector showed some growth, the numbers are raising questions about how quickly AI will begin to boost revenue for tech giants like Alphabet. Investors are starting to wonder when they'll see real acceleration in revenue, given the billions being poured into AI. Announcing even larger spending plans doesn’t ease the growing concern that the massive investment may not pay off as hoped.

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1 in 12 People Globally Are Now Spotify Active Users

After years of chasing profitability, Spotify’s financial 2024 Wrapped hit all the right notes for investors yesterday. The streaming giant surpassed expectations with impressive Q4 earnings, growing its subscriber base and cash flow, leading to its first-ever profitable year.

Chart-Topping Performance: Spotify added 35 million monthly active users last quarter, bringing its total to 675 million—well ahead of analyst expectations and marking its strongest Q4 performance ever. Given the world’s population is around 8 billion, that means roughly 1 in 12 people on the planet is now using Spotify.

Staying in Tune: Even with price hikes—Spotify Premium now costs $11.99 per month—the company has managed to keep users loyal, with low churn rates and increasing numbers of free listeners. This user growth was a key driver behind Spotify’s historic full-year profit.

Spotify’s "efficiency strategy," led by CEO Daniel Ek, is paying off. Gross profit margins hit a record 32.2%, and operating expenses were trimmed by 16% year-over-year. Looking forward, Ek has emphasized that Spotify will continue to make investments in long-term initiatives, such as boosting creator monetization and expanding business offerings for podcast creators and authors.

Quick Signal:
  • Palantir Surprises with Strong Q4 Earnings, Soars 24% Palantir exceeded expectations in its Q4 earnings report, with shares soaring nearly 24% by day’s end. Even the company’s staunchest critics were forced to admit, “we were wrong” in their initial outlook.
  • PayPal Plunges Amid Market Share Worries PayPal took a significant hit, falling 13% as concerns over losing market share in online checkouts weighed heavily on investor sentiment.
  • Super Micro Surges After Positive Update Super Micro rose more than 8% following a "business update" that sparked optimism about its ability to avoid delisting from the Nasdaq.
  • Merck Takes a Hit After Scaling Back Gardasil Sales to China Merck saw its stock drop 9% after announcing a reduction in Gardasil sales to China, leading to a rough day for the pharma giant.

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Nasdaq®, Nasdaq-100 Index®, Nasdaq-100®, and NDX® are trademarks of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

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