Alphabet (Google's parent company) gave Wall Street a surprise in its earnings release on Tuesday, with holiday ad sales missing expectations and announcing it will increase spending on items like servers this year to boost artificial intelligence.。

Against the backdrop of economic uncertainty in the United States, Alphabet's powerful divisions, Google and YouTube, and other online platforms such as Facebook, Instagram, TikTok and Amazon.com competitive advertising revenue。

Despite strong retail sales, the company's fourth-quarter advertising revenue rose to $65.5 billion from $59 billion the year before.。That's below the average analyst forecast of $66.1 billion, according to LSEG data.。

"Investing.Thomas Monteiro, an analyst at com, said: "Alphabet's poor ad revenue data shows that global businesses are still uncertain about the pace of interest rate cuts by central banks around the world.。"

Google is the provider of the technology behind today's artificial intelligence boom, while also competing with two industry competitors that have attracted business attention - OpenAI and Microsoft, creators of ChatGPT。

Although Google Cloud's revenue exceeded Wall Street's expectations and grew due to artificial intelligence, Microsoft Azure grew faster during the same period。

Such AI requires significant investment in servers, data centers, and research。Alphabet's capital spending rose 45% to $11 billion, the highest level in years。Chief Financial Officer Ruth Porat warned on an analyst call that capital spending will significantly exceed 2023 this year.。

In an effort to reduce costs, computer giants have begun shutting down low-priority projects and laying off workers.。According to Porat, Alphabet expects $700 million in layoff-related charges in the first quarter.。

Google is adding its ChatGPT rival Bard to a suite of complex models called Gemini.。It has agreed to invest up to $2 billion in high-profile AI company Anthromic to compete with bigger cloud rivals Microsoft and Amazon for customers.。And it's handing Gemini over to marketers to keep money flowing into Google's search business.。

However, due to geopolitical and economic instability, the advertising benefits of AI may be delayed, which may discourage ad buyers.。The United States has begun investigating AI investments, including Alphabet, while Google is preparing to appeal a major antitrust lawsuit.。

Alphabet reports fourth-quarter profit of $20.7 billion。

During the analyst call, CEO Sundar Pichai highlighted the progress of Alphabet's businesses in artificial intelligence, such as the ability to answer new questions.。

Since OpenAI launched ChatGPT in November 2022, the tech community has been in a frenzy, showing the public how so-called generative AI can generate new text and graphics from a single command.。Advances also increase the likelihood that AI "agents" will meet human needs with increasing autonomy.。

Speaking about the company's digital assistant, Google Assistant, Pichai said AI "allows us to act more like an agent over time" and "go beyond being responsive and follow up more deeply for users."。

Investor interest in Google Cloud increases as Alphabet focuses on AI。Last year, the unit posted its first quarterly profit, but revenue growth slowed as customers cut back on cloud spending.。

Microsoft, which has integrated artificial intelligence in the enterprise's long-accepted cloud and productivity suite, has been a strong competitor, while Google has been promoting competing products.。

Generative AI drives cloud expansion, Pichai tells analysts。In the most recent quarter, Google Cloud's revenue reached $9.2 billion, surpassing the $8.9 billion forecast.。This shows cloud revenue growth from 25 in the previous quarter..7% re-accelerated, but less than the 32% increase in the same period last year。

On Tuesday, Microsoft said revenue from its Azure cloud platform rose 30 percent.。

Overall, Alphabet's revenue for the quarter ended Dec. 31 was $86.3 billion, beating the $85.3 billion forecast, according to LSEG data.。