Artificial intelligence took up most of the time during the earnings call for Alphabet — Google’s parent company — and Microsoft, which saw strong boosts from their search and cloud business to quarterly earnings.
In their earnings calls on Tuesday, the two tech giants, currently vying for the future of search engines, offered very different assessments of the extent of the market turmoil. Google executives encouraged investors to trust the company’s long track record as the world’s leading search engine, and framed artificial intelligence as just another shift in its ever-evolving business. Microsoft confirmed that something more dramatic is in the works.
Investors seemed to like Microsoft’s thesis better, as speculation pushed its shares up as much as 9.7% in extended trading, while Alphabet gained less than 2%.
Until recently, Google was seen as invincible in the online search market, which dominates all over the world. That changed with the advent of the hugely popular ChatGPT. Microsoft has begun integrating technology developed by OpenAI into its Bing search engine, and the partnership has increased pressure on Google to reinvent its core search business to allow for the more conversational exchanges enabled by generative AI.
Speaking to analysts, Alphabet CEO Sundar Pichai emphasized that Google is investing heavily in artificial intelligence, yet he downplayed the technology’s importance to the search engine advertising business, which remains the company’s lifeblood. He is optimistic that users will continue to appreciate the value of online advertising even if searches yield a summary composed of a large language form, rather than the familiar list of links that Google provided long ago.
“Over the years, we’ve gone through many shifts in research,” Pichai said. “And since we’ve developed the research, I think we’ve always had a solid and fundamental approach in terms of how we develop the ads as well.”
However, Microsoft CEO Satya Nadella has indicated that his company is a formidable competitor. He said app installs have quadrupled since the launch of the AI-powered version of Bing in February. He added that Bing captured a significant share of the US market in the quarter, without providing specific metrics.
And billions of dollars in revenue can be poised to be snapped up even with relatively small changes in market share. But for at least the most recent quarter, Google’s search business seemed to have weathered growing competitive threats and the broader downturn in the digital advertising market. The company’s revenues from research and related business rose to nearly $40.4 billion in the period ending March 31, exceeding analyst estimates, according to Bloomberg, which was viewed by Al Arabiya.net.
With Google’s move to integrate generative AI into its search engine, Pichai said the company will benefit from its institutional know-how. “We will be guided by data, years of experience about what people want and our high standards of quality,” added Pichai. “And we will test and iterate as we go forward because we know that billions of people trust Google to provide the right information.”
For his part, said analyst at “Insider Intelligence”, Max Wellens, that the company has enough reasons for concern.
“Google’s core business faces the most serious challenges it has faced in some time,” Wellnes wrote in a note.