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Google's Strong Q3 Earnings Amid AI Focus


Despite facing stiff competition, Google remains robust, as revealed in the recent third quarter earnings reported by its parent company, Alphabet.

Google's primary revenue driver, its advertising business, continues to prosper. The search segment alone generated $44 billion, marking an 11% year-on-year increase.

A point of interest is how Google's AI enhancements, particularly the AI-powered Search Generative Experience (SGE), might affect its primary revenue stream. Currently, SGE is optional, so its influence on the ad business remains speculative.

Addressing this during the earnings call, CEO Sundar Pichai mentioned the company's plans to introduce ad formats tailored to SGE. Chief Business Officer Philipp Schindler emphasized the significance of maintaining advertising opportunities throughout the new search experience. Pichai added that the company is committed to ensuring the SGE's seamless integration with their advertising platform.

Google envisions AI-infused search as a key strategic focus for the upcoming decade. Pichai anticipates a seamless evolution of search and Assistant in this timeframe. He has previously commented that SGE will eventually become the default for search, and with recent discussions about advertising, it's clear Google is strategizing on monetizing AI-powered search further.

Other business sectors under Google are also flourishing. YouTube ads reported $7.9 billion in revenue, a 12% growth compared to last year. Innovative AI tools, such as the "Dream Screen" feature, are being integrated into YouTube. Google's cloud division, offering AI solutions for customer applications, saw a revenue of $8.4 billion, a 22% increase from Q3 2022.

Alphabet's announcement in the second quarter about CFO Ruth Porat's promotion to President and Chief Investment Officer of both Alphabet and Google raised questions about her successor—a topic that remained untouched during the call. However, Porat hinted at potential changes in Alphabet's "Other Bets" investments, suggesting a possibility of future portfolio reductions.

Additionally, looming over Google is the Department of Justice’s antitrust trial initiated in September. The trial's outcome might have significant implications for the tech giant.

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Posted: 2023-10-25
By: dwirch
Viewed: 99 times

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