【招银国际】Increase AI investment to unlock growth opportunities in FY25-250206（5页）.pdf

1、 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG:RESP CMBR OR http:/.hk 1 MN 6 Feb 2025 CMB International Global Markets|Equity Research|Company Update Alphabet(GOOG US)Increase AI investment to unlock growth opportunities in FY25 Alphabet rep

2、orted 4Q24 results:net revenue(excl.TAC)grew by 13%YoY to US$81.6bn,and net income increased by 28%YoY to US$26.5bn,both in line with Bloomberg consensus estimate.FY24 net income was up by 36%YoY to US$100.1bn,primarily due to the enhanced operating efficiency and savings of exit charges related to

3、the global office space optimization.Looking ahead,management guided total capex to reach c.US$75bn in FY25E(+43%YoY)and expected headcount growth in key areas such as AI and cloud,which will impact the margin outlook in FY25E.Thus,we lower our FY25-26E net income forecast by 1-2%to factor in the hi

4、gher-than-expected AI investment.We fine-tune our target price to US$234.0 based on 26x FY25E PE(previous:US$218.0 based on 24x FY25E PE).Maintain BUY.Google Advertising maintained solid growth.Within Google Advertising:1)Google Search&other revenue was up by 12.5%YoY to US$54.0bn in 4Q24,driven by

5、growth of ad spend from financial services and retail sectors;2)YouTube ad revenue grew by 13.8%YoY to US$10.5bn in 4Q24,primarily attributable to the strong ad spend on US elections,which almost doubled compared to the 2020 election;3)Google Network revenue declined by 4%YoY to US$8.0bn in 4Q24.For

6、 FY25E,management noted several headwinds that might impact advertising revenue growth:1)lapping the one-time strength in the financial service vertical throughout 2024;2)strengthening of the USD versus other key currencies.AI continued to improve user experience and create new monetization opportun