Google Reports 7 Out of 10 Generative AI Unicorns Are Cloud Customers

The tech industry has been buzzing over generative artificial intelligence (AI) for months.

But has the technology, whose capabilities are being promoted as the next big leap forward for the sector, completely reshaped the landscape?

When OpenAI launched its headline-grabbing (and crafting) ChatGPT tool last fall, observers whispered that incumbent giants like Google had lost a step.

Alphabet’s latest second quarter 2023 earnings results show that Big Tech’s biggest firms aren’t going anywhere any time soon.

And they plan to use their size to their advantage.

The company beat Wall Street expectations by a considerable margin, and underscored the positive impact generative AI is having on its bottom line by emphasizing to investors on the call that the evolving ecosystem has supercharged Alphabet’s total addressable market (TAM).

“We intuitively know how to integrate AI into our products,” Alphabet and Google CEO Sundar Pichai told investors on Tuesday’s (July 25) call.

“Google Cloud infrastructure is optimized for AI, and more than 70% of generative AI unicorns are Google Cloud customers,” he added.

The company said its Cloud business revenue grew by 28%.

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Building the Infrastructure for Innovations

In its earnings call last quarter, Alphabet mentioned AI 55 times. This quarter, the mega tech company mentioned AI more than 70 times.

“There’s exciting momentum across our products and the company, which drove strong results this quarter. Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services. With 15 products that each serve half a billion people, and six that serve over 2 billion each, we have so many opportunities to deliver on our mission,” Pichai highlighted to investors on the call.

“AI is helping differentiate core products while helping expand partner ecosystem,” he added.

Alphabet executives noted the business provides the widest choice of AI supercomputer options to businesses looking to host and develop their own solutions, and remains committed to investing in its own technical and back-end needs to stay in front of the AI arms race.

“We do expected elevated investment in our technical infrastructure, and the primary driver is to support the opportunities we see in AI as we continue to see the pace of innovation quicken,” said Ruth Porat, CFO of Alphabet and Google.

“The deep computer science work, the talent, and the infrastructure we have built from the earliest days … will enable us to stay at the cutting edge of technology,” said Pichai, who also noted that he sees open-source AI having a “critical role to play in this emerging ecosystem,” while demurring when asked about Alphabet’s plans for its own models.  

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The Alphabet chief emphasized that the company’s investments in AI are “directly applicable” to Cloud as well, noting that AI helps Alphabet differentiate its core products, including areas like cybersecurity.

“Generative AI can connect the dots for people throughout their online experience as they explore the web — enabling them to go deeper,” he added.

Google Chief Business Officer Philipp Schindler told investors that AI has been having an impact across Search and Ads for years, and that ads in particular will play “an important role” as the company’s Search product continues to evolve.

“More than half of queries are inherently commercial in nature. … We have a long history of AI personalization,” he said.

Alphabet’s Longtime CFO Promoted

Of note was the announcement that Alphabet and Google CFO Ruth Porat will assume the newly created role of president and chief investment officer of Alphabet and Google, effective Sept. 1, where she will oversee Alphabet’s “Other Bets” investments and work more closely with policymakers and regulators.

“I’m excited about this new role and the opportunity to engage with leaders globally to unlock economic growth via technology and investment,” Porat said.

She will continue to serve as CFO, including leading the company’s 2024 and long-range capital planning processes, while the company searches for and selects her successor.

PYMNTS has long been covering how the evolution of the CFO role beyond its traditional definitions is critical for organizations to win in the 21st century’s digital age.

There was no mention on the earnings call of the reported return of Google co-founder Sergey Brin to help boost the company’s AI programs.