Is the momentum of AI starting to wane?Target PracticeGoogle's parent company Alphabet failed to hit sales targets, falling a 0.1 percent short of Wall Street's revenue expectations a fraction of a point that's seen the company's stock slide almost eight percent today, in its worst performance since October 2023.It's also a sign of the times: as the New York Times reports, the whiff was due to slower-than-expected growth of its cloud-computing division, which delivers its AI tools to other businesses.While a reported $96.5 billion in revenue versus the expected $96.6 billion sounds well within a margin of error, it shows that even for a company of Google's scale and stature, actually making money off AI even on the infrastructure side is still a risky business.That's despite Alphabet committing a whopping $75 billion on capital expenditures as it builds out AI infrastructure, $22 billion more than just last year, following the lead of its competitors in the AI space, including Meta.Everyone's pouring money in, but it's as unclear as ever when the industry will start generating meaningful revenue and for how many players.Catching UpInvestors are also still reeling from the emergence of Chinese AI startup DeepSeek, which shook Silicon Valley to its core last week. The company's ultra-lean and highly efficient AI models that can be trainedfor a tiny fraction of the price of Western competitors but still keep up caught the AI industry by surprise, wiping out over $1 trillion in market value in a single day.Is Alphabet's latest earnings result the canary in the coal mine? Should the AI industry brace for tougher days ahead as investors become increasingly skeptical of what the tech has to offer? Or are investors concerned over OpenAI's ChatGPT overtaking Google's search engine?Illustrating the drama, this week Google appears to have retroactively edited the YouTube video of a Super Bowl ad for its core AI model called Gemini, to remove an extremely obvious error the AI made about the popularity of gouda cheese."Although its still well insulated, Googles advantages in search hinge on its ubiquity and entrenched consumer behavior," Emarketer senior analyst Evelyn Mitchell-Wolf told The Guardian.This year "could be the year those advantages meaningfully erode as antitrust enforcement and open-source AI models change the game," she added. "And Clouds disappointing results suggest that AI-powered momentum might be beginning to wane just as Googles closed model strategy is called into question by DeepSeek."Share This Article