Alphabet, the parent company of Google, revealed important information about its strategy and progress with artificial intelligence (AI) during its first-quarter earnings call. Alphabet CEO, Sundar Pichai, spoke about the company's development of its cutting-edge AI model, Gemini, and how generative AI could revolutionize Google Search.
Pichai emphasized Alphabet's potential for leading the next wave of AI innovation based on its considerable infrastructure, history of AI investment, and a broad customer base with billions of users. The tech giant is now researching ways to monetize AI through advertising, Google Cloud, and other subscription services.
Given the significant costs associated with AI, Alphabet is aiming to re-engineer its cost base sustainably. The company's $12 billion in capital expenditures for the quarter was largely spent on updating its technical infrastructure, such as servers and data centers to support AI.
Generative AI's ability to aid in creating efficient ad content was highlighted by Chief Business Officer (CBO) Philipp Schindler. The company is making further strides in enhancing customer engagement through innovative ad placements and real-time stock visibility in search results.
Aside from AI, Alphabet announced that it would be paying out a dividend to shareholders for the first time, boosting their stock price. CFO Ruth Porat explained this decision as strengthening Alphabet's overall capital return program. A new $70 billion stock buyback program was also unveiled. Following the earnings call, Alphabet shares enjoyed an 11.8% surge, marking a 25% increase since the beginning of 2024.