Alphabet Inc., the parent company of Google, today unveiled its financial achievements for the first quarter of 2024, marking a significant period of growth influenced heavily by advancements in artificial intelligence (AI), referred to by CEO Sundar Pichai as the “Gemini era.”
Alphabet reported a notable 15% increase in revenue, reaching US$80.5 billion this quarter, surpassing the expectations of Wall Street analysts. The company also saw a rise in net income to US$23.7 billion and reported diluted earnings per share of US$1.89. A substantial improvement was noted in operating margins, which expanded from 25% last year to 32% this year.
Ruth Porat, the President and CFO of Alphabet, expressed satisfaction with the results, attributing them to robust revenue performance across the board and ongoing efforts to optimise the company's cost structure. The primary revenue drivers were Google's core advertising units, including Search and YouTube, with advertising revenues hitting US$61.7 billion. The Google Cloud division also showed impressive growth, with revenues up 28% year-over-year to US$9.6 billion.
Pichai was optimistic about the future, noting that he expects YouTube and Cloud to achieve a combined annual revenue run rate of US$100 billion by the end of 2024.
Generative AI and its integration into Google's ecosystem
In what Sundar Pichai termed the “Gemini era,” Google has been integrating AI into its core services like Search, where AI-powered features have been tested in Search Labs and recently incorporated into the main search results page. Pichai emphasised the cautious approach to this integration, aiming to enhance the search experience while prioritising traffic to websites and merchants.
Google's foray into generative AI has already processed over a billion queries, helping users access new information and handle more complex inquiries. The introduction of the “Circle to Search” feature on Android, which uses Google Lens to provide instant AI-powered answers when users circle objects on their screen or in videos, further demonstrates Google's commitment to integrating AI into everyday user interactions.
As part of its broader AI strategy, Alphabet is consolidating all AI model development under the Google DeepMind umbrella. Pichai highlighted significant reductions in the costs associated with AI, noting an 80% decrease in machine costs for generative AI search results over the past year, thanks to hardware and software enhancements.
Looking ahead, Alphabet plans to monetize AI through various channels, including advertising products, cloud offerings, and subscription services. The integration of the Gemini model into Google's ad products and cloud services is poised to bring cutting-edge AI capabilities to a global enterprise audience. Additionally, Google One, the company's subscription service, recently surpassed 100 million paid subscribers and introduced a new premium plan featuring advanced generative AI functionalities.
With upcoming events like Google I/O and Google Marketing Live, Alphabet is set to provide further insights into its AI-driven initiatives and product roadmap, reinforcing its position to lead the next wave of AI innovation.
