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    Earnings Call: Here’s everything Google said about AI in its earnings call for the first quarter of the 2024 financial year

    “The AI transition, I think it’s a once-in-a-generation kind of opportunity. We’ve definitely been gearing up for this for a long time,” Google’s Chief Executive Officer, Sundar Pichai, said while answering a question from Goldman Sachs’ Eric Sheridan during Google’s first quarter 2024 earnings call webcast, (Q1FY24, the quarter that ended on March 31, 2024). “I think for the first time, we can work on AI in a horizontal way and it impacts the entire breadth of the company — be it Search, be it YouTube, be it Cloud, be it Waymo and so on. And we see a rapid pace of innovation in that underlying. So it’s a very leveraged way to do it, and I see that as a real opportunity ahead,” Pichai added.

    Google reported a capital expenditure of $12 billion in the first quarter of 2024. The company attributed this expenditure to investment in its technical infrastructure and its confidence in the opportunities offered by AI [artificial intelligence] across our business, Google’s chief financial officer Ruth Porat explained. Google expects its quarterly capital expenditures to be about the same or about Q1 levels.

    The company believes that increased investments will help it “the frontiers of AI models, and enable innovation across our services, especially in Search,” Pichai explained. Pichai added that the company is starting to introduce AI overviews in search. “We are being measured in how we do this, focusing on areas where gen AI can improve the search experience while also prioritizing traffic to websites and merchants,” he mentioned. The company reports seeing increased search usage among people who use the new AI overviews as well as increased user satisfaction with the results. “Since introducing SGE [search generative engine] about a year ago, machine costs associated with SGE responses have decreased 80% from when first introduced in Labs,” Pichai added. The company plans to expand the type of queries that AI-enabled search and overviews will address. The service has currently only been rolled out in the US and the UK.

    Other key AI developments:

    Google unified its AI development teams: 

    The company merged the teams that build AI models for it under Google Deepmind. “This will help simplify development and establish a single access point for our product teams as they build generative AI applications with these models,” Pichai explained. Google also unified its machine learning (ML) infrastructure and ML teams to enable faster decisions, smarter compute allocation, and a better customer experience.

    Monetizing AI through Cloud:

    In Q1FY25, Google Open (Google’s paid cloud subscription service) introduced a premium subscription plan with Gemini Advanced included in it. Google Open has 100 million subscribers as of the call. “Our differentiation in cloud begins with our AI hypercomputer, which provides efficient and cost-effective infrastructure to train and serve models. Today, more than 60% of funded gen AI start-ups and nearly 90% of gen AI unicorns are Google Cloud customers. And customers like PayPal and Kakao Brain are choosing our infrastructure,” Pichai mentioned.

    Google Cloud’s revenue was notably up by 28% from the previous quarter, reaching $9.6 billion in Q1. This, Porat said, reflects significant growth in the Google Cloud Platform with an increasing contribution from AI.

    Use of AI in Google Ads: 

    The company mentioned that AI innovation is core to every aspect of its ads product portfolio from targeting, bidding, creative, and measurement, across campaign types.

    “We’ve talked about whole solutions like smart bidding use AI to predict future ad conversions and their value in helping businesses stay agile and responsive to rapid shifts in demand and how products like Broadmatch leverage LLMs [large language models] to match ads to relevant searches and help advertisers respond to what millions of people are searching for. This is foundational. As advances accelerate in our underlying AI models, our ability to help businesses users at speed and scale and drive ROI [return on investment] just keeps getting better.”

    In February, Google combined Performance Max (a type of advertising campaign businesses can opt for under Google Ads) with Gemini, which it says, is helping businesses curate and generate text and image assets to instantly meet the assets required by Performance Max. The company said that it is improving advertising results by for businesses opting into automatically created assets (ACA) in Google Ads. ACAs are created using generative AI and businesses using them, on average, see 5% more conversions at a similar cost per conversion in Search and Performance Max campaigns.

    Earlier Google revealed in Q2FY23 earnings call that it will launch an generative AI tool for advertisers to promote their ads. The company chiefly focused  on its work in the field of generative AI and its impact on advertisers and online ads. You can check Medianama’s analysis of that here. 

     


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    The post Earnings Call: Here’s everything Google said about AI in its earnings call for the first quarter of the 2024 financial year appeared first on MediaNama.

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