During Google's third quarter earnings conference, investors posed inquiries to company executives about how they could monetize artificial intelligence. The executives stated that they have had some positive outcomes in regards to advertising and aspire to expand those gains to other areas. Nonetheless, they were often evasive in their responses. The corporation has yet to roll out its widely anticipated Search Generative Experience to the broader public.
Amid the hype surrounding artificial intelligence (AI), few companies have mentioned it more than Google. Investors now want to know how this hyped tech will translate into tangible profits. Google parent Alphabet reported its third quarter earnings on Tuesday, which revealed greater spending on AI infrastructure and slower than expected cloud growth. This raised several questions about how AI will generate income. Alphabet's revenue increased 11%, but its stock dropped in extended trading due to the underwhelming cloud performance. Capital expenditures rose to $8 billion, mostly going to AI compute and technology. Analysts are curious whether the money will be well spent, as executives insist the use of AI is still in its early stages. Last November, Google's launch of ChatGPT sparked a wave of AI enthusiasm that pushed the company to act quickly, which included its own chatbot Bard and numerous AI projects. It is estimated that training a large language model itself is expensive, especially with larger datasets. During the company's conference call, several investors and analysts asked how AI would be monetized. Last August, Google trialed the Search Generative Experience, which gives users a glimpse of an AI-driven search. It has yet to be released to the public, making more pertinent the question of a return on capital investment. CEO Sundar Pichai maintained that the "true north" was the user experience, and AI-powered tools such as Performance Max, which boosts conversions 18% at a similar cost per action, were proving effective. Pichai also stated that 80% of advertisers already use a search feature enhanced by AI. Investors hope to gain insight in the upcoming years on how AI will impact Google's ad goals and the industry as a whole.
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