Alphabet focuses on AI as key driver of future growth

Onome Amuge

Alphabet, has in its Q3 earnings announcement, stated that it remains focused on investing in AI technology, citing the 11 per cent year-on-year rise in revenue driven by advertising gains.

The company stated that AI is a key area of focus for the future, with plans to continue investing in AI-related projects such as language and computer vision technology.

In the earnings call, CEO Sundar Pichai stated that the company is continuing to make AI more helpful for everyone, with exciting progress and lots more to come. CFO Ruth Porat added that the company expects to maintain “elevated levels of investment” for the rest of the year and into 2024, complementing the capital expenditure in Q3 which was largely driven by investments in AI-compatible infrastructure, including servers and data centers.

Pichai explained that the company’s focus is on making long-term changes to its cost base to create investment capacity, with the most important priority being AI. This indicates that the company is committed to investing in AI as a core strategic focus area, even in the face of rising costs and challenging economic conditions. Pichai went on to say that AI is an important part of the company’s future and a critical factor in its continued success.

Alphabet has been working to integrate AI into products like Search, YouTube, and its Pixel devices, with initiatives such as its chatbot Bard. In Q3 2022, Alphabet’s total revenue increased from $69 billion to $76.7 billion, driven by a rise in Google’s advertising revenue from $54.5 billion to $59.6 billion. YouTube’s revenue also increased from $7.1 billion to $8 billion, further underscoring the importance of AI-enabled products to the company’s growth.

According to Porat,the 22 per cent increase in cloud revenue to $8.4 billion reflected the effects of customers optimising their spending, as they seek to lower costs during a time of economic uncertainty.

Meanwhile, the company’s net income was $19.7 billion for the quarter, compared to $13.9 billion in the same quarter last year, indicating a significant increase as well as the positive impact of AI on Alphabet’s profitability