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Alphabet shares sink after cloud growth stalls and spending surges

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Alphabet shares sink after cloud growth stalls and spending surges

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Alphabet shares dropped sharply after slowing growth in the Google parent’s cloud business and plans to spend $75bn this year on building capacity for artificial intelligence products unnerved investors.

Alphabet late on Tuesday reported double-digit increases in fourth-quarter revenues and profits, driven by its core advertising business. But investors homed in on a disappointing quarter for its vast cloud unit, which runs Google’s data centres.

The cloud division posted a 30 per cent increase in revenues to almost $12bn, but this was slower than the 35 per cent growth rate in the previous three months, and below the $12.2bn analysts had forecast. Chief financial officer Anat Ashkenazi blamed this on “more demand than we had available capacity”.

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However, the scale of Google’s AI-related spending to meet this demand surprised the market. Fourth-quarter capital expenditure jumped to $14.3bn, up from $11bn last year and exceeding expectations for $13.2bn.

Google’s chief executive Sundar Pichai said spending on data centres and servers would accelerate to $75bn this year, up from $53bn in 2024 and a third more than Wall Street had estimated.

“The cost of actually using [AI] is going to keep coming down, which will make more extraordinary use cases feasible,” Pichai said, denying that the company was spending profligately. “That’s the opportunity space. It’s as big as it comes, and that’s why you’re seeing us invest to meet that moment.”

Alphabet shares dropped 8 per cent in New York morning trading on Wednesday, leaving it on track for the fifth-worst trading day in the past decade and wiping about $200bn from its market capitalisation. Still, the stock had previously risen 45 per cent in the past 12 months, valuing it at $2.5tn behind only Apple, Microsoft, Nvidia and Amazon.

Alphabet’s fall echoed that of Microsoft last week, which also lost $200bn in market value after it also missed cloud growth estimates and said AI spending would reach $80bn in its fiscal year ending on June 30. The same day, Meta’s chief executive Mark Zuckerberg vowed to spend “hundreds of billions” more to stay in the vanguard of AI research.

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The market reaction reflects broader concerns about spending at US groups that build and operate the vast data centres filled with advanced chips that they claim are needed to train and run AI’s large-language models.

The Alphabet sell-off also builds on doubts sown last month by a new model from Chinese start-up DeepSeek, which claimed to achieve comparable performance to US AI leaders including Google’s Gemini, OpenAI’s ChatGPT and Anthropic’s Claude on a shoestring budget using far fewer advanced Nvidia chips.

Pichai said DeepSeek had a “tremendous team” that had shown “you can drive a lot of efficiency to serve these [AI] models really well”.

He also fielded analysts’ questions about whether Gemini and its rivals were cannibalising its core search business, as users increasingly use chatbots to find information and answers online, obviating the need to click on the advertisements that support its free service.

There is little evidence of its dominant search engine being challenged yet. Search-linked ad revenue rose 13 per cent to $54bn in the quarter, beating estimates, supported by another quarter of ad growth at YouTube.

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Overall, group revenue rose 12 per cent to $96.5bn in the fourth quarter compared with the same three-month period a year earlier. Excluding traffic acquisition costs paid to advertising and device partners, that figure was $81.6bn, missing Wall Street estimates of $82.8bn in a Bloomberg poll. Net income rose 28 per cent to $26.5bn.

Google is also in the crosshairs of regulators around the world. The company faces the prospect of being broken up after losing a landmark case brought by the US Department of Justice, which resulted in a ruling that its search business had engaged in monopolistic behaviour.

This week it emerged that China had revived antitrust investigations into Google’s Android mobile operating system, raiding its Beijing office in a move that has been interpreted as leverage in tariff negotiations with US President Donald Trump.

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Waymo called the cops on teen riders, raising privacy concerns

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Waymo called the cops on teen riders, raising privacy concerns

A Waymo robotaxi drives in San Francisco’s North Beach neighborhood this week.

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Police in San Mateo, Calif., posted Monday on social media that they had apprehended a pair of teenagers from a Waymo driverless robotaxi after the company alerted authorities to suspected criminal activity. It’s the latest incident involving video surveillance of passengers and others by autonomous vehicles — raising questions about the limits of privacy in such vehicles.

The Facebook post by the San Mateo County Police said: “Parents do you know where your teens are? @waymo does!”

The 15-year-olds were allegedly drinking alcohol and shooting toy guns from the car, according to the police. They said Waymo’s systems detected behavior that then triggered a safety response, after which the company disabled the vehicle and contacted police.

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Waymo’s cars, equipped with an array of cameras, microphones and other sensors to monitor passengers and other nearby vehicles, are becoming more common in cities across the United States. Experts say the detention of the two teens in San Mateo highlights a potential — but not inevitable — trade-off between privacy and convenience. It also questions the extent to which companies similar to Waymo are required to hand over private data, including audio and video of passengers, in situations where a crime is suspected.

NPR reached out to Waymo, which is owned by Alphabet, the parent company of Google, for comment on the details of the San Mateo incident and how the company responded, but did not hear back. But on its website, the company says that as many as 29 cameras in its autonomous cars provide an all-around view and “are designed with high dynamic range and thermal stability, to see in both daylight and low-light conditions, and tackle more complex environments.”

“There already exist laws that govern duty to report or even duty to protect” for carriers such as Waymo, according to Alessandro Acquisti, a professor of information technology at the MIT Sloan School of Management. “The privacy problems arise when and if driverless carrier companies used such laws or ethical obligations as a pretext for blanket, indiscriminate accumulation of identifiable data for unspecified future purposes.”

That includes not just monitoring people inside the cars, but outside too. Take, for example, a hit-and-run investigation last year in Los Angeles. Media reported that the police inquiry was aided by video captured by a Waymo taxi that had a clear view of the crime. Critics suggested at the time that authorities were using the company’s vehicles as a mobile surveillance platform. And during 2025 protests in Los Angeles against Immigration and Customs Enforcement crackdowns, demonstrators vandalized Waymos, apparently angry that video recorded by the vehicles could be used by police, although there is no evidence that happened.

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Trump fires last members of election commission, inciting fears of midterm ‘chaos’

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Trump fires last members of election commission, inciting fears of midterm ‘chaos’

Donald Trump has terminated the remaining members of the independent, federal commission that assists election administration officials nationwide just a few months before the midterm elections, multiple outlets reported Thursday.

The remaining three commissioners of the four-member bipartisan commission ⁠were forced out on Thursday in different ways. The one Republican appointee resigned and the other ⁠two, Democratic appointees were notified of their terminations via email from ​the White House presidential personnel office.

“On ‌behalf of President ‌Donald J Trump, I am writing to inform you that your position ‌as Commissioner of the Election Assistance Commission is terminated, effective immediately. Thank you for your service,” the email, seen by Reuters, said.

The White House did not immediately respond to a request for comment.

The Election Assistance Commission serves as a “national clearinghouse of information on election ‌administration”, accredits testing laboratories and certifies voting systems, and maintains the national mail-voter registration form developed by the National ​Voter Registration Act of 1993, according to the commission’s website. The terminations follow Trump and top administration officials’ advocacy to change vote-by-mail requirements and investigations into the 2020 election outcome, which Trump lost to Democrat Joe Biden.

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“It is ⁠irresponsible and dangerous that this Administration remains dead set on ​causing chaos for ​our election officials across this ​country,” Arizona secretary of state Adrian Fontes said in a ​Thursday statement. “This ‌move undermines the integrity ​of nonpartisan ​election administration.”

The 2002 law that established the commission, the Help America Vote Act, states the president can appoint replacements to the commission.

It is unclear how Trump will move ahead with the commission.

Reuters contributed reporting

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Former Olympian pleads not guilty in reflecting pool vandalism charges

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Former Olympian pleads not guilty in reflecting pool vandalism charges

Former U.S. Olympian David Hearn (left) walks with his attorney Norman Eisen to speak to reporters and protesters gathered after his arraignment at the Superior Court of the District of Columbia in Washington, D.C. on Thursday.

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Former U.S. Olympic canoeist David Hearn pleaded not guilty to damaging the Lincoln Memorial Reflecting Pool in D.C. Superior Court Thursday morning.

Federal prosecutors charged Hearn with a single count of destruction of property causing more than $1,000 in damage to the pool.

Hearn has previously claimed, which his attorneys repeated during a short press conference outside the court, that he simply touched the water in the pool out of curiosity.

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The Trump administration had just completed a $14 million renovation of the pool.

But shortly after the work finished, peeling paint and algae gathered in the water. The remodel has been largely criticized as a massive failure and waste of taxpayer dollars.

Superior Court Judge Carmen McLean released Hearn on his own recognizance. His next hearing is scheduled for Aug. 5.

Norm Eisen, one of Hearn’s attorneys, spoke to reporters outside of court following the hearing. He said the administration is using Hearn as a “scapegoat … for their own failures.”

“It is not a crime to touch the reflecting pool, to touch water in the United States of America,” he said.

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Prosecutors say there is a host of evidence against Hearn.

This is a developing story.

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