Alphabet is embracing generative AI for growth in Google Cloud and advertising tools.

From Nasdaq: 2025-02-28 05:47:00

MTV’s debut with “Video Killed the Radio Star” seemed to predict the demise of radio, but decades later, radio remains strong while MTV’s popularity has waned. Generative AI, like OpenAI’s ChatGPT, was seen as a threat to Google but Alphabet is embracing the technology for growth, especially in its Google Cloud business.

Google Cloud, the third-largest cloud services provider, saw a 30% revenue increase to $11.9 billion in Q4 of 2024, largely due to strong demand for generative AI products like Vertex AI Studio and Vertex AI Builder. Alphabet views generative AI as a key growth opportunity and is developing its own chips for AI models.

While Google Cloud is crucial to Alphabet’s revenue, most of its profits come from advertising on Google Search and YouTube. Generative AI tools like AI Overviews in Google Search and Google Circle to Search are enhancing user experience and increasing search usage. Google is also offering AI tools for advertising campaigns, delivering higher returns on ad spend.

Alphabet’s future in generative AI looks promising, with projects like Gemini 2.0, Project Astra, Project Mariner, and Jules showing potential for growth. The company is working towards developing artificial general intelligence (AGI) using generative AI as a foundation, which could open up significant growth opportunities in the future. AGI could become a reality within the next 10 years, according to Google DeepMind CEO Demis Hassabis.

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Read more at Nasdaq: Here’s How Generative AI Factors Into Alphabet’s Plan for Growth