Google CEO Sundar Pichai stated that overall growth in the third quarter was due to the integration of artificial intelligence (AI) into most areas. Despite struggling to compete with TikTok, YouTube still earned $7.95 billion, exceeding expectations of $7.81 billion. Additionally, views on Shorts increased to 70 billion views per day. In September, Google also announced the addition of AI-powered video editing features to Shorts to further boost the platform's growth. Pichai said the company is working to make AI more useful for users.
Google Cloud revenue declined from 28% to 22.5% in Q3 2023.
However, businesses are looking to limit spending on expensive cloud-related services and artificial intelligence (AI) tools amid the economic downturn. Google Cloud's third-quarter revenue reached $8.41 billion, its slowest growth since the first quarter of 2021, lower than the $8.64 billion forecast by Wall Street.
This has led investors to worry that Google risks falling further behind other cloud computing giants like Amazon and Microsoft's Azure. In the third quarter of 2023, Azure grew rapidly and achieved higher-than-expected revenue and profits, earning $24.3 billion.
Max Willens, a senior analyst at market research firm Insider Intelligence, said that cloud computing is a far more complex business than advertising, and Google Cloud faces fierce competition. While Google Cloud's partnerships with AI startups could offer long-term benefits, current revenue figures are not yet satisfying for investors.
In early 2023, Alphabet laid off approximately 12,000 employees, equivalent to 6% of the company's workforce. In addition, the company also eliminated some employee perks to reduce costs amidst challenging economic conditions.
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