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CEO Sundar Pichai says the investment in AI is paying off for the tech giant.
In its third-quarter earnings call, Google-owner Alphabet reported a 16pc revenue increase year on year to $88.3bn, while net income rose by 34pc to $26.3bn, in growth the company attributed to its long-term focus and investment in AI.
Google Services, which includes Search and YouTube ads, had an operating income of nearly $31bn and profits shot up by 35pc in Google Cloud to hit an income of $1.9bn – a sharp rise from $266m in the same period last year.
The company attributed the success of Google Cloud to accelerated growth across AI infrastructure, generative AI solutions and core Cloud Platform products.
“The momentum across the company is extraordinary,” said Alphabet and Google CEO Sundar Pichai in the earnings announcement yesterday (29 October). “Our commitment to innovation, as well as our long-term focus and investment in AI are paying off with consumers and partners benefiting from our AI tools.”
Pichai said that Google is “uniquely” positioned to “lead in the era of AI”, pointing to the company’s “robust” AI infrastructure and technical AI research teams.
Notably, Pichai said that Google is using AI to improve coding processes to boost productivity and efficiency. “Today, more than a quarter of all new code at Google is generated by AI, then reviewed and accepted by engineers. This helps our engineers do more and move faster,” he said.
Google’s range of AI products and services is growing. Recently, the company launched its latest Pixel 9 phones with upgrades that support advanced AI models. While a few months earlier, the company integrated Gemini into Fitbit, its personal health tracking device.
Pichai highlighted that Gemini, the company’s AI chatbot, is integrated into all seven of the company’s products and platforms that together have more than 2bn monthly users. Gemini’s API calls have grown by nearly 14 times in six months, he said.
Google’s new AI Overview feature, that started rolling out to more than a hundred new countries and territories this week, “will now reach more than 1bn users on a monthly basis”, Pichai said.
Industry research analyst Tracy Woo from Forrester said Google is remaking itself as the “AI leader” and expects stronger traction in the coming year. “Cloud and AI continue to be big growth drivers for Alphabet as [year-on-year] targets are exceeded by over a quarter point,” she said.
While senior Forrester analyst Nikhil Lai says that regulatory risks to Google Search and competition from Microsoft, Amazon and others will mean there’s “a tough road ahead” for the company.
Google’s AI products have faced legal scrutiny in recent months. Ireland’ Data Protection Commission opened an investigation into the company to see if Google complied with EU data laws when developing one of its AI models.
While earlier this week, Microsoft laid out allegations against Google, accusing the company of running “shadow campaigns” against its competitor.
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