谷歌-C：Increase AI investment to unlock growth opportunities in FY25

Investment Rating - The report maintains a "BUY" rating for Alphabet, with a target price adjusted to US$234.00, reflecting a potential upside of 21.1% from the current price of US$193.30 [1][2]. Core Insights - Alphabet's 4Q24 results showed net revenue growth of 13% YoY to US$81.6 billion and net income growth of 28% YoY to US$26.5 billion, aligning with consensus estimates [1]. - For FY24, net income increased by 36% YoY to US$100.1 billion, driven by improved operating efficiency and cost savings from office space optimization [1]. - Management anticipates a significant increase in capital expenditures to approximately US$75 billion in FY25E, a 43% YoY increase, primarily for AI and cloud investments, which may pressure margins [1][6]. - The report indicates a slight reduction in FY25-26E net income forecasts by 1-2% due to higher-than-expected AI investments [1]. Financial Performance Summary - FY23A revenue was US$307.4 billion, projected to grow to US$350.0 billion in FY24A and further to US$392.3 billion in FY25E [2][11]. - Net profit for FY23A was US$73.8 billion, expected to rise to US$100.1 billion in FY24A and US$110.7 billion in FY25E [2][11]. - The consensus EPS is projected to increase from US$5.84 in FY23A to US$8.13 in FY24A and US$9.14 in FY25E [2]. Advertising and Cloud Revenue Insights - Google Advertising maintained solid growth, with Google Search & other revenue increasing by 12.5% YoY to US$54.0 billion in 4Q24, driven by ad spending in financial services and retail [6]. - YouTube ad revenue grew by 13.8% YoY to US$10.5 billion, significantly boosted by increased ad spending during the US elections [6]. - Google Cloud revenue grew by 30% YoY to US$12.0 billion in 4Q24, although growth decelerated due to supply constraints [6]. AI Investment and Future Outlook - Alphabet plans to enhance AI investments to unlock growth potential, with a focus on increasing AI capacity to meet rising demand [6][9]. - The operating profit margin improved by 4.6 percentage points YoY to 32.1% in 4Q24, attributed to operational efficiencies [6]. - Management expects variability in cloud revenue growth rates in 2025, depending on the timing of new capacity deployment [6].