In a sign that the dominant search engine is finding its footing, Google parent company Alphabet reported a net profit of $15 billion in the first quarter of 2023, exceeding market estimates.
The tech giant is under pressure as a result of a general downturn in advertising spending, overstaffing during the Covid boom, and a significant artificial intelligence challenge from Microsoft.
In the same three-month period that the corporation announced it would lay off 12,000 employees, or six percent of its workforce, its quarterly sales came in at about $70 billion, a billion more than experts had predicted.
Google reported a $2 billion penalty for anticipated expenditures associated with the layoffs in its financial results.
When Microsoft-backed ChatGPT was released and swiftly became viral late last year, Google came under concern. The developer of Windows has integrated the technology into its office suite and Bing search engine.
According to media reports, the search giant has since swiftly released Bard, its own version of the language-based AI, but the rollout was viewed as awkward and has thus far disappointed outsiders and business insiders.
With firms concerned that they would lose out to rivals soon, an arms race over AI is anticipated to last for several years and prove costly for the internet titans.
Google has reorganized its AI division, moving the independently operated Deep Mind subsidiary inside the corporation to a division called Google Brain, in an effort to become ready for the coming AI battles.
The numerous difficulties prompted Google CEO Sundar Pichai to do a rare US media tour in recent weeks to reassure the public that the business continued to be a market leader in everything from search to maps to the development of AI.
Despite these challenges, Pichai’s 2022 remuneration package was more than $225 million, according to a regulatory filing that was made public last week.
The third consecutive quarter of decreased advertising revenue for Google-owned YouTube, down 2.6 percent year over year to $6.7 billion, shows that problems are still there.
The difficulties at YouTube started during the same quarter when Susan Wojcicki, the company’s longtime CEO, retired after nine years in office and was replaced by veteran executive Neal Mohan.
“Google exceeded both revenue and earnings expectations this quarter, but reasons for investor optimism are modest,” said Insider Intelligence senior analyst Max Willens.
“More importantly, Google’s ad business is under threat. YouTube revenues declining again, and Search and Other revenues rising less than 2 percent reflect the reality that Google’s core business is facing the most serious challenges it has encountered in quite some time.”
Alphabet’s share price has increased significantly since the lows before the layoff announcements in January despite the more fundamental issues, rising by more than 4% on Tuesday (25 April 2023) in after-hours trading to $108.4.
This was still a long way from the almost $150 witnessed in 2021, when advertising revenue was booming.
Ref: AFP
