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Gemini is Alphabet's next-generation foundational model
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CEO Sundar Pichai said Gemini will be the basis for new model launches in 2024
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Gemini will be incorporated across Google's product suite, including cloud, and could help boost slowing cloud growth
Alphabet is looking to artificial intelligence (AI) as a potential saving grace for revenue after admitting growth in its cloud unit in Q3 was impacted by the optimization trend that has afflicted Amazon and Microsoft for several quarters now — but the name of its savior isn’t Bard or Duet or Vertex. It’s Gemini.
First announced at Google’s annual I/O event in May, Gemini is Google’s forthcoming next-generation AI foundation model. Designed to be multi-modal, it can handle several different types of data.
Speaking on Alphabet’s Q3 2023 earnings call, CEO Sundar Pichai said with Gemini the company is “really laying the foundation of what I think of as the next-generation series of models we'll be launching throughout 2024.”
“We are developing Gemini in a way that it is going to be available at various sizes and capabilities, and we'll be using it immediately across all our products internally as well as bringing it out to both developers and cloud customers through Vertex,” he continued. “So, I view it as a journey and each generation is going to be better than the other, and we are definitely investing and the early results are very promising.”
Gemini’s release date remains to be determined, but Pichai noted there’s a ton of customer interest in Google’s other AI products. That includes the Vertex capabilities it recently highlighted at Google Cloud Next.
“Just on Vertex alone, the number of projects grew over 7x,” Pichai said. “And so we see signs of stabilization, and I'm optimistic about what's ahead.”
Financial considerations
The reference to stabilization came in response to questions about Google’s Cloud business, which saw its growth rate fall below analyst expectations and historical rates in Q3.
Alphabet’s consolidated revenue of $76.7 billion was up 11% year on year, with net income jumping nearly $6 billion to $19.7 billion. Google Cloud revenue rose 22% from $6.9 billion to $8.4 billion, with the unit’s operating income skyrocketing from a loss of $440 million in Q3 2022 to positive $266 million this year.
For comparison, Google Cloud's year-on-year growth rate was 38% in Q3 2022 and this quarter's rate was also down sequentially from 28%.
Alphabet CFO Ruth Porat said on the call the growth rate reflected “the impact of customer optimization efforts.”
New Street Research’s Dan Salmon noted that while Microsoft and Amazon have cited optimization as a reason for slowing revenue growth in the past, this is a “newly cited reason for Google, and makes us wonder if it was concentrated in a small group of larger customers.”
“The release of Gemini can’t come soon enough,” Salmon concluded.
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