Alphabet Inc., the parent company of Google, announced its first quarter of 2024 financial results today.
While Google posted double-digit growth in key revenue areas, the focus was on its developments in AI, dubbed the “Gemini era” by CEO Sundar Pichai.
The numbers: 15% revenue growth, expanded operating margins
Alphabet reported first-quarter revenue of $80.5 billion, up 15% year over year, beating Wall Street projections.
Net income was $23.7 billion, with diluted earnings per share of $1.89. Operating margins increased to 32%, compared to 25% the previous year.
Ruth Porat, president and chief financial officer of Alphabet, said:
“Our strong financial results reflect the strength of revenues across the company and ongoing efforts to sustainably reinvent our cost base.”
Google’s core advertising units, such as Search and YouTube, drove growth. Google’s advertising revenue reached $61.7 billion in the quarter.
The Cloud division also maintained momentum, with revenue of $9.6 billion, up 28% from a year earlier.
Pichai highlighted that YouTube and Cloud are expected to exit by 2024 with a combined annual revenue rate of $100 billion.
Integrating generative AI into search
Google experimented with AI-based features in Search Labs before recently introducing AI overviews to the main search results page.
As for the gradual rollout, Pichai states:
“They’re measuring how we’re doing, focusing on areas where AI can improve the search experience, while prioritizing traffic to websites and merchants.”
Pichai reports that Google’s generative AI features have already answered more than a billion queries:
“We’ve already served billions of queries with our generative AI features. It enables people to access new information, ask questions in new ways, and ask more complex questions.”
Google reports increased search usage and user satisfaction among those who interact with the new AI overview results.
The company also highlighted its “Search to Search” feature on Android, which allows users to circle objects on the screen or in videos to get instant answers with artificial intelligence through Google Lens.
Reorganizing for the “Age of Gemini”
As part of its AI roadmap, Alphabet is consolidating all teams building AI models under the Google DeepMind umbrella.
Pichai revealed that through hardware and software improvements, the company has reduced the machine costs associated with its generative AI search results by 80% over the past year.
He states:
“Our data centers are some of the highest performing, most secure, most reliable and most efficient in the world. We’ve developed new AI models and algorithms that are over a hundred times more efficient than 18 months ago.
How will Google make money with AI?
Alphabet sees opportunities to monetize AI through its ad products, cloud offerings and subscription services.
Google is integrating Gemini into advertising products like Performance Max. The company’s Cloud division delivers “the best of Google AI” to business customers around the world.
Google One, the company’s subscription service, surpassed 100 million paying subscribers in the first quarter and introduced a new premium plan with advanced generative AI capabilities powered by Gemini models.
Future perspectives
Pichai outlined six key advantages to position Alphabet to lead the “next wave of AI innovation”:
Research leadership in AI breakthroughs like the multimodal Gemini model Robust AI infrastructure and custom TPU chips Integration of generative AI into search to improve user experience A global product footprint reaching billions Simplified teams and improved execution speed Multiple revenue streams to monetize AI through advertising and the cloud
With upcoming events like Google I/O and Google Marketing Live, the company is expected to share more updates on its AI initiatives and product roadmap.
Featured image: Sergei Elagin/Shutterstock
