Alphabet has reported solid momentum in its cloud business, with $8.4 billion in quarterly sales.
Alphabet CEO Sundar Pichai said AI and generative AI are making their presence felt across a wide range of Alphabet’s technologies.
AI was improving knowledge and learning, including Alphabet’s work with its Search Generative Experience, which he described as an experiment to bring generative AI capabilities into search.
“We’ve learned a lot from people trying it, and we have added new capabilities like incorporating videos and images into responses and generating imagery,” he said.
“We’ve also made it easier to understand and debug generative code. Direct user feedback has been positive, with strong growth and adoption.”
Alphabet is prioritising approaches that add value for users, send valuable traffic to publishers, and support a healthy open Internet, Pichai said.
“With generative AI applied to search, we can serve a wider range of information needs and answer new types of questions, including those that benefit from multiple perspectives,” he said. “We are surfacing more links with SGE and linking to a wider range of sources on the results page, creating new opportunities for content to be discovered.”
Alphabet is working at boosting creativity and productivity, where Google Bard has proved particularly helpful, Pichai said.
“Bard can now integrate with Google apps and services showing relevant information from Workspace Maps, YouTube, and Google flights and hotels,” he said. “Earlier this month, we announced Assistant with Bard, a personal assistant powered by generative AI. It combines Bard’s generative and reasoning capabilities with Assistant’s personalised help. You can interact with it through text, voice, or images. And in the coming months, you will be able to opt in on Android and iOS mobile devices.”
Google wants to enable developers, businesses, and other organisations to build their own transformative products and services, Pichai said. Stating thousands of customers and partners are already using Google Cloud to capture the potential of AI.
“One area we are focused on is making sure people can more easily identify when they are encountering AI-generated content online,” he said. “Using new technology powered by Google DeepMind SynthID, images generated by Vertex AI can be watermarked in a way that is invisible to the human eye without reducing the image quality. Underlying all this work is the foundational research done by our teams at Google DeepMind and Google Research,” Pichai said.
He said that Alphabet would continue to see AI as a long-term investment focus.
“As we expand access to our new AI services, we continue to make meaningful investments in support of our AI efforts,” he said. “We remain committed to durably re-engineering our cost base in order to help create capacity for these investments in support of long-term sustainable financial value. Across Alphabet, teams are looking at ways to operate as effectively as possible focused on their biggest priorities,” Pichai said.
For its third fiscal quarter 2023, which ended September 30, Alphabet reported total revenue of $76.69bn, up 11 per cent over the $69.09bn the company reported for its third fiscal quarter 2022.
This included Google Cloud revenue of $8.41bn, up 22 per cent over the $6.87bn the company reported for the year-ago quarter. Alphabet stock sank six per cent in after-hours trading Tuesday as cloud revenue came in slightly below Wall Street expectations.
Google Cloud reported operating income of $266 million, up significantly from the $440 million loss the business reported last year.
The Google Cloud business includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. The organisation generates revenue from fees received for Google Cloud Platform services, Google Workspace communication and collaboration tools, and other enterprise services, the company said.
US revenue for the quarter was $36.35 billion, up from $33.37 billion.
Total revenue beat analyst expectations by $980 million. However, Google Cloud revenue missed analyst expectations, the only segment that missed.
Alphabet also reported GAAP net income for the quarter of $19.69 billion up from $13.91bn or $1.06 per share. That beat analyst expectations by 10 cents per share.
