YouTube’s focus on AI has done it again. During Alphabet’s fourth quarter of 2024, YouTube reported that its ad revenue grew 13.8% year-over-year. By the end of the quarter, its ad revenue was $10.47 billion compared to the $9.2 billion the company saw in 2023.
This marks YouTube’s best quarter in terms of ad sales to date. Previously, YouTube’s best quarter happened during the fourth quarter of 2023, which saw the division bring in $9.2 billion in ad revenue. That was followed by the third quarter of 2024, which saw $8.92 billion in revenue. Last quarter, YouTube’s growth was largely credited to Alphabet’s push into artificial intelligence, which allowed the video platform to do a better job recommending videos to users.
That remained true in the fourth quarter of 2024. YouTube also saw a boost thanks to strong ad spends tied to the 2024 U.S. election. Combined spending on the platform from both Republicans and Democrats almost doubled the ad spends YouTube saw during the 2020 election.
Alphabet also saw growth across its net income and revenue. The strong quarter was credited to the company’s focus on artificial intelligence as well as its “momentum across the business,” CEO Sundar Pichai said in a statement included with Tuesday’s earnings report.
Here are the key takeaways:
Net Income: Grew 28% year-over-year to $26.5 billion for the quarter. Overall, net income for 2024 grew nearly 36% to $100.1 billion
Earnings Per Share: $2.15, compared to $2.12 per share expected by analysts surveyed by Zacks Investment Research.
Revenue: Grew 12% year-over-year to $96.5 billion for the quarter. Overall, revenue for 2024 grew nearly 14% to $350 billion
YouTube Ad Revenue: Grew 13.8% year-over-year to $10.47 billion compared to $9.2 billion in 2023
Google Subscriptions, Platforms and Devices: Grew 7.8% year-over-year to $11.6 billion
During the earnings call, Pichai noted that in search, AI overviews are now available in more than 100 countries. “They continue to drive higher satisfaction and search usage. Meanwhile, Circle to Search is now available on over 200 million Android devices, on the cloud and YouTube.”
As for YouTube Shorts, the monetization rate for the social media option compared to in-stream viewing increased by more than 30% in America. Shorts viewership on connected TVs accounted for 15% of overall viewing time during the quarter, continuing a trend of more viewers accessing YouTube and its products from their living rooms. “We expect to make additional progress in 2025. We’re making it easier for advertisers to benefit from Shorts on all screens,” Philipp Schindler, Google’s Chief Business Officer, said during the company’s earnings call.
Before the results were announced, Wall Street was optimistic Alphabet would have a strong quarter, predicting 11% year-over-year revenue growth. This prediction came in the wake of Alphabet shares closing for $200 each for the first time as the company invested more heavily into AI and announced expansions for its self-driving car division, Waymo.
However, the company does have some points of concern as it closes out fiscal year 2024 and enters 2025. The China-based AI company DeepSeek has proven to be a problem for any company in the space. Additionally, Alphabet continued to face antitrust litigation during its fourth quarter of 2024 as the Department of Justice called for Google to divest its Chrome browser in November. This came in the wake of an August ruling that stated the company has a monopoly on the search market.
In the coming months, Google is also expected to cut employees in its Platforms and Devices unit and has already started offering buyout to employees. That unit along includes more than 25,000 full-time employees who work across Android, Chrome, ChromeOS, Fitbit, Google Photos, Google One, Nest and Pixel. These expected cuts come as Google continues to prioritize AI. The company has previously announced it plans on expanding its spending on AI infrastructure in 2025.
More to come …
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