Google's Q4 Earnings and AI Impact

If we had a dollar for each mention of AI in Alphabet’s Q4 earnings call, the total would be around $90, as per the call's transcript. Despite Google's ad revenue falling short of analyst expectations, experiencing a 6% stock price drop by 10 am Wednesday, the advertising business, fueled by investments in AI and live sports, reached $65.5 billion last quarter, marking an 11% YoY increase. Notably, YouTube contributed significantly, earning $9.2 billion in ad revenue, up almost 16% YoY.

However, analysts anticipated Alphabet's total ad revenue to be $65.9 billion, creating a slight gap.

During the investor call, Philipp Schindler, SVP and chief business officer, highlighted the growth of YouTube Shorts, boasting 70 billion daily views and increased creator earnings monthly since introducing revenue sharing in February 2023. Schindler also emphasized Google's AI investments in measurement, bidding capabilities, and recent introductions like Demand Gen and AI-supported search ads.

Despite remaining secretive about the impact of bringing NFL Sunday Ticket to YouTube TV, Schindler mentioned over 90 advertisers partnering with YouTube for football programming advertising. Total revenue from subscription products, primarily driven by YouTube, reached $15 billion in 2023.

Addressing downsizing in Google's ad sales team, Schindler clarified it wasn't due to AI replacing roles but a strategic move to leverage AI for significant ROI at scale.