Alphabet Inc. GOOGL GOOG revealed that its artificial intelligence-powered search features are achieving monetization rates comparable to traditional search results, marking a milestone in the company’s AI strategy.
What Happened: During Alphabet’s fourth-quarter of 2024 earnings call, Chief Business Officer Philipp Schindler announced that AI overviews, the company’s AI-enhanced search feature, is delivering revenue at “approximately the same rate” as conventional search results.
This performance suggests the successful integration of AI technology without sacrificing the company’s core revenue engine.
The development is particularly noteworthy given that search advertising remains Alphabet’s largest revenue source, generating $54 billion in the fourth quarter, up 13% from the previous year. The successful monetization of AI features comes as the company significantly expands its AI infrastructure, announcing a planned $75 billion capital expenditure for 2025.
“AI overviews continue to drive higher satisfaction and search usage,” Schindler noted during the earnings call, indicating that the technology is not only matching revenue expectations but also improving user engagement. This is especially pronounced among younger users, suggesting potential for long-term growth in user adoption.
Why It Matters: The company reported that AI overviews are now available in more than 100 countries, while its newer Circle to Search feature has been rolled out to over 200 million Android devices. Users who have tried Circle to Search now initiate more than 10% of their searches through this feature, demonstrating strong user adoption of AI-powered search tools.
Google faces growing competition in the AI search market from OpenAI‘s SearchGPT, Perplexity AI, Microsoft‘s AI-powered Bing, and China’s DeepSeek, all offering advanced conversational and real-time search capabilities.
Price Action: Alphabet’s Class A stock declined 7.59% in after-hours trading to $190.71, while Class C shares fell 7.27% to $192.60, according to data from Benzinga Pro.
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