Despite economic challenges, Google Cloud provided a glimmer of hope for Alphabet in its 4th quarter results as revenue growth showed resilience. Google’s parent company, Alphabet reported overall gross revenue of $76.05 billion for the fourth quarter of 2022, with a slight 1% increase from last year’s figures. The Google Cloud business segment did very well this quarter, earning 32% more revenue than it did last year. This quarter, Google Cloud brought in $7.32 billion.
However, overall net income decreased year-over-year in conjunction with tightened customer spending. The net income went down by 34%, settling at $13.6 billion. Revenue from Google services like Google Search, YouTube ads, Google Network, Google advertising, and others went down from $69.4 billion in Q4 of 2021 to $67.8 billion in Q4 of 2022.
In the United States, Alphabet earned $36.9 billion in Q4 2022, up by 6.3% from the last quarter of 2021. In the EMEA and APAC regions, there was a decline in the reported earnings with each region bringing a revenue of $21.7 billion (down by 6%) and $11.9 billion (down by 5.9%) respectively.
Alphabet and Google CEO, Sundar Pichai said that good progress is being made in Cloud, YouTube subscriptions, and Pixel devices. They are working on a plan to make their businesses more financially sustainable and growing across Alphabet.
In January 2023, Google announced a reduction in the workforce by approximately 12,000 roles. This reduction is expected to result in employee severance and related charges of $1.9 billion to $2.3 billion, the majority of which will be recognized in the first quarter of 2023. In addition, Google is taking actions to optimize its global office space usage, which is expected to result in exit costs relating to office space reductions of approximately $0.5 billion in the first quarter of 2023.
Google plans to roll out AI products in 2023
Microsoft’s collaboration with OpenAI and the integration of ChatGPT into various platforms, such as Bing and Microsoft Office applications had stirred a fair share of curiosity regarding Google’s response.
Citing that AI is the most profound technology they are working on today, Sundar Pichai said that the investments they have made in deep computer science will pay off soon because AI is reaching an inflection point.
He said that people will be soon able to interact directly with its newest, most powerful model for search in experimental and innovative ways. Leveraging LaMDA (Language Model for Dialogue Applications), Google’s powerful technology, which promises factual answers as well as engaging dialogue results to queries posed by its users.