Over the past year, Google has grappled with two of the biggest threats in its 25-year history: the rise of generative AI and increased regulation. AI in particular has shaken the foundations of the company. The company made major changes to search, reorganized its search, Android, and hardware teams around AI, and launched its own Gemini AI model to take advantage of this opportunity.
Google executives cut projects and furloughed employees to refocus, and yesterday announced its first-ever dividend and $70 billion in stock buybacks along with first-quarter 2024 results.
At least investors are eating it up. Google's parent company Alphabet, which briefly reached $2 trillion in November 2021, has finally officially achieved and maintained a market capitalization of $2 trillion in all-day trading. Google is the fourth most valuable listed company. Globally, it is second only to Nvidia ($2.2 trillion), Apple ($2.6 trillion), and Microsoft ($3.0 trillion). Amazon is currently worth $1.8 trillion and Meta is worth $1.1 trillion.
Unlike Meta, whose stock price fell 10% after Mark Zuckerberg said his “massive” bet on generative AI would take years to pay off, Google announced yesterday that the company He said he has already found some small ways to sell. For example, to assist advertisers with targeting. Advertisers who deploy his AI in their P-MAX tools say they are “63% more likely to publish campaigns with superior advertising performance.”
The company also said that Discover Financial is deploying AI tools to about 10,000 call center agents, and that Ikea expects to see an increase in one form of revenue from its “value-based bidding solution.” Although he hasn't yet talked about monetizing the AI's answers on Google Search, CEO Sundar Pichai said he is “very confident we can manage the cost of how we serve these queries.” ”.
For now, Google says it doesn't want to confuse search too much. “We are focusing on the areas where Gen AI can improve the search experience and evaluating how we do this, while prioritizing traffic to websites and merchants.” Pichai.
Google's existing business also appears to be doing well, with the company making $23.7 billion in profit on $80.5 billion in revenue, according to its 2024 Q1 earnings report released yesterday. Not only did revenue increase by 15% year-over-year, but profits also increased by 14% year-over-year. holiday quarter When search revenue and ad revenue were both a little higher.
And while Google may have cut more than a thousand employees in an effort to boost profits, it appears the company may have slowed down or paused its layoffs. Last quarter, Google reported that it spent $700 million on layoffs in January alone, but the new Q1 report reveals that Google spent $700 million on severance and related costs in January, February, and March. It shows that only $716 million was spent on “expenses.”
Search and ad revenue each grew 14% year-over-year in the first quarter, YouTube ads grew nearly 21%, and “Subscriptions, Platforms, and Devices” grew 18% year-over-year. Google business chief Philip Schindler says this is largely due to his subscription to YouTube Premium (and therefore not necessarily his Pixel 8 sales).
Google is also improving its ability to compete with TikTok and Instagram Reels, Schindler said, noting that the number of creators uploading YouTube Shorts has increased by 50% and that shorts revenue has increased by 12% in the last quarter alone. He talked about the increase.
Google will hold a developer conference “Google I/O” on May 14th.
