YouTube just pulled off a flex Wall Street can’t ignore—hitting a record $10.5 billion in ad revenue for Q4 2024. That’s a 13.8% year-over-year jump, fueled in part by the chaos of an election season that had political advertisers throwing money at the platform like it was a last-minute Super Bowl commercial. But while YouTube is printing money, its parent, Alphabet, is about to light $75 billion on fire in an AI spending spree that’s making investors nervous.
YouTube Wins, Alphabet Wobbles
Let’s start with the good news: YouTube remains the undisputed king of ad-supported streaming. The platform now commands 11.1% of all U.S. TV viewing time—more than Netflix (8.5%), Prime Video (4%), Hulu (2.1%), and Disney+(2.1%).
That dominance is translating into real dollars, with YouTube’s total annual ad revenue hitting $36.15 billion in 2024. And that’s before counting subscriptions from YouTube Premium and YouTube TV, which Alphabet conveniently tucks away in a different revenue bucket.
But Alphabet as a whole? A bit shakier. The tech giant pulled in $96.5 billion in Q4 revenue and $26.5 billion in net income, beating earnings-per-share estimates but missing Wall Street’s revenue projections. Investors were already side-eyeing Alphabet’s slowing Google Cloud growth, and then CEO Sundar Pichai dropped the bombshell: the company plans to spend…wait for it…. A cool $75 billion in capital expenditures this year—far more than analysts predicted.
AI or Bust
Alphabet is going all-in on artificial intelligence, trying to keep pace with OpenAI, Microsoft, and Meta. But here’s the problem: the AI arms race ain’t cheap, and Alphabet’s biggest rivals are already flashing some serious firepower. Last month, Chinese startup DeepSeek shook up the industry with claims that its large language model (or LLM) is dramatically more efficient than anything U.S. companies have rolled out. Investors are right to ask: is Alphabet spending all this cash to stay ahead, or just to avoid falling behind?
The TikTok Wild Card
Meanwhile, YouTube’s ad empire might be about to get an unexpected boost. The ongoing U.S. government crackdown on TikTok—banned on federal devices and facing fresh legal threats—has already sent creators scrambling for backup plans. And where are they going? YouTube Shorts is one place. If TikTok takes a bigger hit, YouTube could find itself in a prime position to scoop up even more users, creators, and advertisers.
The Take
YouTube crushed Q4. Alphabet? Not so much. While YouTube’s ad dominance continues to grow, Alphabet’s decision to pour tens of billions into AI development is making Wall Street uneasy. If their AI gamble pays off, Pichai looks like a visionary. If not, well… just ask Meta how well investors react to tech companies setting cash on fire in pursuit of the “next big thing.”
For now, YouTube remains the MVP, carrying Alphabet’s earnings report on its back. But with AI spend ramping up and the TikTok drama unfolding, the real story of 2025 is just getting started.
