Alphabet plans to invest $75 billion despite economic uncertainties and tariffs.
A market analyst says the elimination of the de minimis rule could reduce Google’s ad revenue.
Google faces rising expenses and legal challenges that could force it to divest in key products.
Alphabet, the parent company of Google and YouTube, confirmed its plan to spend $75 billion over the course of the year, despite macroeconomic uncertainties posed by tariffs and increasing operating expenses.
CEO Sundar Pichai said earlier this month at the company’s annual conference for its cloud computing unit that the investment would mostly focus on building out data center capacity as AI infrastructure.
This came after Alphabet posted first-quarter earnings on Thursday with revenues that beat expectations, sending shares up over 4% in after-hours trading.
“We’re obviously not immune to the macro environment,” said said Philipp Schindler, Chief Business Officer at Google, fielding a question about tariff impacts during the investors call, “But we wouldn’t want to speculate about potential impacts, beyond noting that the changes to the de minimis exemption will obviously cause a slight headwind to our ads business in 2025, primarily from APEC-based retailers.”
“And maybe to zoom out, I would say we have a lot of experience in managing through uncertain times, and we focus on helping our customers by providing deep insights into changing consumer behavior that is relevant to their business,” Schindler added.
The de minimis exemption previously allowed goods valued below $800 to enter the US without paying duties, which worked to the advantage of Chinese companies selling cheap goods to US consumers, especially fast-fashion apparel retailers.
Nikhil Lai, senior analyst in performance marketing at Forrester, told Business Insider that the possibility of stagnating inflation due to tariffs could “dent Google’s advertising revenue” over the next few quarters.
“Shein and Temu are going to spend a lot less on Google than they did before tariffs — that’s going to have a material impact on Google’s top line,” said Lai. “Every global retail supply chain will become more expensive; I don’t think they can pass those added expenses onto consumers.”
“Going out to eat, traveling this summer, advertisers will spend less as well,” Lai added.
In addition to tariff risks, Anat Ashkenazi, CFO of Google and Alphabet, said during the investors’ call that the company could be facing headwinds “in the form of higher depreciation,” which would put pressure on profits.
