YouTube, the internet’s largest video streaming platform, achieved a significant milestone in the final quarter of 2024, posting a 13.8% increase in global ad revenue to surpass $10 billion for the first time in its history.
The platform’s record-breaking Q4 ad sales of $10.47 billion outperformed Wall Street analysts’ consensus estimate of $10.23 billion, underscoring the continued dominance of video advertising.
This figure represents only a fraction of YouTube’s total business, as it excludes subscription revenue from services like YouTube TV and YouTube Premium. Last year, parent company Alphabet revealed that YouTube’s total revenue exceeded $50 billion for the 12 months ending September 2024—a first in the platform’s history.
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A key driver of YouTube’s ad revenue surge was the 2024 U.S. presidential election, which saw both political parties nearly double their ad spending compared to the 2020 elections. According to Google’s chief business officer, Philipp Schindler, political campaigns flooded YouTube with advertising dollars to capture voter attention. On Election Day (Nov. 5, 2024), more than 45 million viewers in the U.S. watched election-related content on the platform.
The election-driven ad boom helped offset concerns about the overall digital advertising market, which had shown signs of slowing earlier in the year due to economic uncertainty. YouTube’s ability to attract high-value political advertisers reaffirmed its status as a critical platform for reaching mass audiences.
Alphabet’s Overall Performance Falls Short of Revenue Expectations
Despite YouTube’s strong performance, Alphabet’s overall Q4 revenue came in at $96.47 billion, slightly below analyst expectations of $96.67 billion. However, the company beat earnings estimates with a net income of $26.54 billion ($2.15 per share), exceeding Wall Street’s forecast of $2.13 per share.
Alphabet’s Google Cloud unit also saw significant growth, with revenue rising 30.1% year over year to $11.96 billion. However, this fell slightly short of Wall Street’s projection of $12.1 billion, suggesting that competition from Microsoft Azure and Amazon Web Services remains strong.
AI Investments Take Center Stage Amid DeepSeek’s Disruption
With search and video advertising still at the core of its business, Alphabet has dramatically ramped up investments in artificial intelligence to compete with rivals like OpenAI, Microsoft, and Meta. CEO Sundar Pichai revealed that Alphabet expects to spend approximately $75 billion in capital expenditures in 2025, significantly higher than the Wall Street consensus of $59.7 billion.
The company’s urgency to strengthen its AI capabilities was further amplified last month after Chinese AI startup DeepSeek disrupted the market with a new large language model (LLM) that it claimed was far more efficient than existing Western models. DeepSeek’s emergence rattled U.S. tech firms, causing stock prices of AI-related companies—including Alphabet—to decline.
When asked about DeepSeek during Alphabet’s earnings call, Pichai acknowledged the Chinese company’s achievements, calling it a “tremendous team that has done very, very good work.” However, he emphasized that Google remains a leader in AI innovation, stating that “our latest AI models are some of the most efficient models out there.”
Pichai also highlighted Google Cloud’s AI-powered portfolio, which he said is experiencing “stronger customer demand” as enterprises increasingly rely on artificial intelligence for business operations.
YouTube’s AI and Streaming Expansion
Beyond its ad revenue growth, YouTube is making moves to integrate AI responsibly, particularly within the entertainment industry. In December, YouTube partnered with the Creative Artists Agency (CAA) to allow celebrities and talent to identify and remove AI-generated deepfakes uploaded to the platform. This move is part of YouTube’s broader efforts to position itself as a responsible AI player amid growing concerns over deepfake content and misinformation.
Meanwhile, YouTube continues to dominate streaming viewership. In December 2024, YouTube accounted for a record 11.1% of all TV streaming usage in the U.S., according to Nielsen. This made it the most-watched streaming platform on television, ahead of:
- Netflix (8.5%)
- Prime Video (4.0%)
- Hulu (2.5%)
- Disney+ (2.1%)
Globally, YouTube’s scale remains massive. The platform reports that more than 1 billion hours of YouTube content are watched daily on televisions worldwide and over 500 hours of video are uploaded every minute to YouTube.
However, Alphabet is facing growing legal and regulatory threats. The U.S. Department of Justice (DOJ) won an antitrust case against the company, with a federal court ruling that Google violated the law by securing default search engine deals with Apple and Samsung.
The DOJ’s proposed remedies could include forcing Google to divest its Chrome browser—a move that would significantly impact its control over web search. A final decision is expected after a two-week trial scheduled for April 2025.