Google’s gamble on AI seems to be paying dividends. After a year of intense focus on generative AI and navigating regulatory concerns, the tech giant reported impressive Q1 2024 results, propelling its market cap to a historic $2 trillion for the first time.
Read: Google could be adding its Gemini AI to Gmail soon
The rise of AI has been a catalyst for significant changes within Google. Search, Android, and hardware teams have been realigned around AI development, culminating in the launch of Google’s own AI model, Gemini. With this focus, Google is looking to capitalize on the potential of AI to transform its core businesses.
Investors are clearly bullish on Google’s future. The company’s strong Q1 performance, with $23.7 billion in profit on $80.5 billion in revenue (a 15% year-over-year increase), has fuelled optimism. Google even announced its first-ever dividend and a massive $70 billion share buyback, demonstrating confidence in its financial health.
While Google emphasizes its cautious approach to monetizing AI in search, the company did reveal some early successes. Advertisers utilizing Google’s AI-powered Performance Max tool are seeing promising results, with a 63% higher likelihood of creating high-performing ad campaigns.
Beyond advertising, partnerships like Discover Financial’s rollout of AI tools for its call centres and Ikea’s revenue increase through “value-based bidding solutions” showcase the broader applicability of AI across industries.
Google understands the sensitivity of search, a core revenue driver. CEO Sundar Pichai emphasized a measured approach, focusing on areas where AI can enhance the user experience without disrupting traffic to websites.
Traditional Businesses Remain Strong: Google’s existing businesses, like search and advertising, continue to be a major source of income. Both search and ad revenue grew 14% year-over-year, exceeding even the traditionally strong holiday quarter. YouTube ads saw even more impressive growth at 21%, while revenue from “subscriptions, platforms, and devices” (primarily YouTube Premium subscriptions) also enjoyed a 18% increase.
Google demonstrates its commitment to competing with platforms like TikTok and Instagram Reels with the rise of YouTube Shorts. Schindler reported a 50% increase in creators uploading Shorts videos and a 12% jump in Shorts monetization rates within the last quarter.
Looking ahead, Google prepares to host its annual developer conference, Google I/O, on May 14th. With AI firmly at the centre of its strategy and traditional businesses thriving, Google appears well-positioned for continued growth and innovation.
