Alphabet’s efforts to integrate generative AI technology into more products have been notable since the launch of OpenAI’s ChatGPIT chatbot late last year.
alphabet inc (NASDAQ: GOOGL), parent company of Google, its shares experienced a nearly 7% decline to $129.39 in pre-market trading. This decline in Alphabet stock came as a surprise, especially after the tech giant reported an 11% increase in revenue for Q3 2023. The decline in share prices is mainly due to Alphabet’s cloud business falling short of analysts’ expectations.
Alphabet’s third quarter results remain cloudy
For the third quarter of this year, Alphabet informed of Earnings of $1.55 per share exceeded the $1.45 per share expected by LSEG (formerly known as Refinitiv). Revenue for the quarter came in at $76.69 billion, exceeding the $75.97 billion estimated by LSEG. These figures indicate a significant surge in the advertising sector, taking the company’s expansion to double digits for the first time in a year.
However, it is the figures from Alphabet’s report that provide cause for concern. While YouTube ad revenue exceeded expectations at $7.95 billion, Google Cloud revenue fell slightly short of $8.41 billion.
Despite this, the cloud unit still managed to grow 22% compared to the same period last year, which was double the rate of expansion for the company as a whole. It is also noteworthy that the cloud business made an operating profit of $266 million, which is a significant improvement from the loss of $440 million in the same period last year.
CEO of Alphabet Sundar Pichai It stressed that the cloud business remains a key area of investment for the company as it looks to compete with Amazon Web Services and Microsoft Azure.
Ruth Porat, Alphabet’s finance chief, said cloud growth “remains strong across geographies, industries and products”. However, the slow expansion rate was attributed to “customer optimization efforts”, a term commonly used by customers to reduce their spending on cloud services.
Alphabet races to integrate generative AI
With the growing importance of generative artificial intelligence (AI), companies are turning to public cloud services to handle demanding workloads. While Alphabet’s cloud unit demonstrated growth, market consensus suggests it needs to become more profitable to meet investors’ expectations.
Alphabet’s efforts to integrate generative AI technology into more products have been notable since the launch of OpenAI’s ChatGPIT chatbot late last year.
The company is currently testing generative AI technology within its core search, with the goal of providing more creative and comprehensive answers to text questions. The potential impact of this technology on Google’s search and advertising business is substantial, as it could change the way people find information online.
Alphabet has been featuring for most of the year cost cutting efforts After years of substantial growth. In January, the company announced significant cuts to its workforce, affecting approximately 6% of its full-time employees. These measures were followed by additional layoffs at various business organizations, such as the news division and the self-driving car unit, Waymo.
Benjamin Godfrey is a blockchain enthusiast and journalist who loves writing about real-life applications of blockchain technology and innovations to promote general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies drives his contributions to well-known blockchain media and sites.
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