AI Boom or Bust? Alphabet’s Growth Meets Samsung’s Semiconductor Challenges

As Alphabet reveals its Q4 FY24 results, the tech giant’s performance highlights both progress and challenges in the rapidly evolving AI landscape. Alphabet reported $96.47 billion in revenue, narrowly missing expectations of $96.56 billion. Earnings per share reached $2.15, slightly exceeding forecasts. YouTube advertising surged 14% year-over-year to $10.47 billion, while Google Cloud revenue grew 30% year-over-year to $11.96 billion but fell short of expectations. 

Sundar Pichai shared his thoughts on Alphabet's Q4 and FY24 performance on X, highlighting the company's strong quarter, driven by its leadership in AI and a unique full-stack approach. Here's what he had to say:

Traffic acquisition costs also came in lower at $14.89 billion versus $15.01 billion predicted. Net income for the quarter rose 28% year-over-year to $26.54 billion, fueled by search revenue of $54.03 billion and $72.46 billion in total advertising revenue. 

The below image summarizes Alphabet's Q4 FY24 results, showcasing $96.5 billion revenue (+12% YoY) and key contributions from search and YouTube advertising. It highlights profits, expenses, and investments.

Despite a weaker-than-expected performance from its Other Bets segment at $400 million, Alphabet remains optimistic, committing $75 billion in capital expenditures for 2025. CFO Anat Ashkenazi stated, 

“We are in a tight supply-demand situation, working very hard to bring more capacity online.”

Samsung Faces Challenges in AI Chip Market

In contrast, Samsung Electronics highlights the risks of falling behind in AI-driven growth. The South Korean chipmaker, the world’s largest memory chip producer, warned of weak semiconductor demand in Q1 2025, sending its shares down 2.5%. Kim Jae-june, EVP of Samsung’s memory division, explained, 

“There will be some temporary restrictions in our [high-bandwidth memory] chip sales in the first quarter. We expect some impact on our HBM demand from not just US restrictions on exports of high-end chips but also a shift in demand for improved chips by major clients.”

Amid these challenges, Samsung faces mounting pressure from rivals. SK Hynix, a key competitor, has outpaced Samsung in the lucrative HBM chip market, even surpassing Samsung’s quarterly profit for the first time. Nvidia CEO Jensen Huang added urgency, noting that Samsung must “engineer a new design” to meet HBM chip standards, while expressing optimism: 

“They can do it and they are working very fast.” 

Samsung’s struggles extend beyond HBM chips to its DRAM business, where declining prices and competition from Chinese upstarts like CXMT further threaten its leadership. Sanjeev Rana, head of Korea equity research at CLSA, remarked, 

“Samsung has lost its leadership in HBMs, and it seems like even in commodity memory they are more exposed to Chinese competition.”

Despite setbacks, Samsung is doubling down on investments, maintaining its capital expenditure levels for memory chips while pivoting to higher-margin AI server chips. The company is also banking on a memory chip demand recovery by Q2 2025, signaling its commitment to long-term positioning rather than retreating in the face of challenges.

While Alphabet’s robust AI investments reflect confidence in future growth, Samsung’s challenges underscore the volatility of the semiconductor market. Both companies serve as critical players in shaping the tech industry, but their contrasting positions highlight the high stakes of navigating an AI-driven future. As billions pour into AI innovation, Samsung’s ability to close the gap and Alphabet’s efforts to expand capacity will significantly influence the next phase of the tech landscape.