Google CEO Pichai: AI, Cloud Innovations To Drive Business Going Forward

‘We have used AI to open up access to knowledge in powerful ways. We’ll continue to incorporate generative AI advances to make search better in a thoughtful and deliberate way. We’ll be guided by data and years of experience about what people want, and our high standards for quality. And we’ll test and iterate as we go because we know that billions of people trust Google to provide the right information,’ Alphabet CEO Sundar Pichai said Tuesday during the company’s fiscal 2023 first quarter earnings call.

The investment by Alphabet, the parent company of Google, in artificial intelligence and cloud is paying off as growth in these two areas means huge opportunities going forward as the company continues its long track record of innovation, said Alphabet CEO Sundar Pichai.

Pichai, in his prepared remarks to financial analysts during the company’s fiscal 2023 first quarter financial analyst call on Tuesday, said Alphabet continues to be on a “long and exciting journey” to build its cloud business and focus on long-term value creation.

Pichai (pictured) focused his prepared remarks on two key themes, the first being advancements in Alphabet’s AI opportunity for consumers, partners, and the company’s own business.

[Related: Google Cloud Debuts Security-Focused Generative AI Platform]

“I’ve compared it to the successful transition we made from desktop to mobile computing over a decade ago,” he said. “Our investments and breakthroughs in AI over the last decade have positioned us well.”

Alphabet has three areas of opportunity, Pichai said.

“Continuing to develop state-of-the-art large language models and make significant improvements across our products to be more helpful to our users; empowering developers, creators, and partners with our tools; [and] enabling organizations of all sizes to utilize and benefit from our AI advances,” he said.

Alphabet has made good progress across all three areas, including the recent introduction of its Bard experimental conversational AI service, the introduction of its PaLM API model to make Bard even more powerful, and enabling Bard to help people with programming and software development tasks, including cogeneration, Pichai said.

“Lots more to come. For developers, we have released our PaLM API alongside our new MakerSuite tool,” he said. “It provides a simple way to access our large language models and begin building new generative AI applications quickly. And a number of organizations are using our generative AI large language models across Google Cloud Platform, Google Workspace and our cybersecurity offerings.”

Alphabet also continues to make search even more helpful, with innovations around Google Lens image recognition, multisearch to do searches across multiple devices at the same time, immersive viewing Maps, Google Translate, and to all the language models powering search, Pichai said.

“We have used AI to open up access to knowledge in powerful ways,” he said. “We’ll continue to incorporate generative AI advances to make search better in a thoughtful and deliberate way. We’ll be guided by data and years of experience about what people want, and our high standards for quality. And we’ll test and iterate as we go because we know that billions of people trust Google to provide the right information.”

AI has also been foundational to Alphabet’s ads business for over a decade, with products like Google Performance Max using the full power of Google’s AI to help advertisers find untapped and incremental conversion opportunities, Pichai said.

At the same time, Alphabet remains focused on ensuring its AI offerings include the highest standards of information integrity, Pichai said.

“As one example, our Perspective API helps to identify and reduce the amount of toxic text that language models train on with significant benefits for information quality,” he said. “This is designed to help ensure the safety of generative AI applications before they are released to the public.”

Alphabet is also using its AI capabilities to improve its own performance as part of a multi-year effort to create savings, such as improving machine utilization and finding more scalable and efficient ways to train and serve machine learning models, Pichai said.

“We are making our data centers more efficient, redistributing workloads and equipment where servers aren’t being fully used,” he said. “This is important work as we continue to significantly invest in infrastructure to drive our many AI opportunities.”

Alphabet’s second key theme is the ongoing momentum in its Google Cloud Platform business and how it is being used to help build one of the world’s largest enterprise software companies, Pichai said.

That growth has come from deep relationships with large enterprises, a strong partner ecosystem, and product leadership, he said.

Over the past three years, Google Cloud Platform’s annual deal volume has grown nearly 500 percent, with large deals over $250 million growing more than 300 percent, he said. Nearly 60 percent of the world’s 1000 largest companies are Google Cloud customers, as are many leading startups and millions of SMBs, he said.

Alphabet has also built a strong partner ecosystem, Pichai said.

“Over the last four years, the number of Google Cloud partner certified practitioners around the world has increased more than 15 times,” he said. “The largest global system integrators have built 13 dedicated practices with Google Cloud compared to zero when we started. And today, more than 100,000 companies are part of our Google Cloud Partner Advantage Program.”

Ruth Porat, Alphabet’s chief financial officer, used her prepared remarks to address the workforce reductions the company unveiled in January, saying the company is meaningfully slowing the pace of hiring in 2023 while still investing in priority areas, particularly in top engineering and technical talent.

For its first fiscal quarter 2023, Alphabet reported revenue of $69.79 billion, up about 2.6 percent from the $68.01 billion the company reported for its fiscal 2022 first quarter. That beat analyst expectations by $950 million, according to Seeking Alpha.

This included Google services revenue of $61.96 billion, up slightly from last year’s $61.47 billion; Google Cloud revenue of $7.45 billion, up 28.1 percent over last year’s $5.82 billion; revenue of $288 million for “other bets,” which was down from last year’s $440 million; and hedging gains of $84 million, down from last year’s $278 million.

On a geographic basis, Alphabet reported U.S. revenue of $32.86 billion, up from $31.73 billion; EMEA (Europe, Middle East, and Africa) income of $21.08 billion, up from $20.32 billion; APAC (Asia and Pacific) revenue of $11.68 billion, down from $11.84 billion; and other Americas revenue of $4.08 billion, up from $3.84 billion.

For the quarter, Alphabet reported GAAP net income of $15.05 billion or $1.17 per share, down from last year’s $16.44 billion or $1.23 per share. That beat analyst expections of $1.07 per share, according to Seeking Alpha.