Jose Luis Magana/AP
- Alphabet just reported blowout first-quarter earnings that sent the Google owner's stock soaring.
- The results are very welcome news for CEO Sundar Pichai.
- He's has been battling a narrative that Google has fallen behind in the AI race.
There's an AI battle raging, and Sundar Pichai appears to be Google's wartime general.
With Pichai at the helm, Alphabet just reported blockbuster first-quarter earnings that surpassed analysts' estimates and sent the stock soaring. The company reported a 15% year-on-year revenue increase and issued its first dividend of 20 cents a share.
The CEO told analysts that Google was well "positioned for the next wave of AI innovation and the opportunity ahead," reminding them the company had been "AI-first" since 2016.
Google has made gains in its AI development and is planning significant investments and products in the field, including a generative AI search engine.
It was a much-needed win for Alphabet's CEO, who has been battling a narrative that the company has fallen behind in the AI race since the launch of Microsoft-backed ChatGPT.
Despite being a pioneer in the field, the company has been fighting perceptions that it's been slow to incorporate AI into its products, especially compared to arch-rival Microsoft.
Alphabet has also suffered a few setbacks this quarter.
It was forced to pause Gemini's AI image generating feature after users found it produced historically inaccurate images. There has also been some internal disquiet over a contract with the Israeli government.
The Gemini incident became the subject of viral criticism and landed Google in the middle of a "woke" culture war. The debacle strengthened the narrative that Google was suddenly behind in the AI race and led to calls for Pichai to step down.
The CEO has also been under pressure from both investors and Google insiders to become more aggressive with its AI strategy. In addition, some Googlers have become frustrated about the lack of clear leadership.
Following a round of layoffs in January, Googlers took public aim at its "glassy-eyed leaders" and organized protests in response.
Pichai has by no means been a passive CEO through the quarter. He's made cuts to headcount and reorganized the company, citing efficiency and speed for the changes. They appear to be paying off.
Pichai told analysts on Thursday's conference call the company had "further consolidated teams that built AI models under Google DeepMind," claiming it would help simplify development within Google.
Google is still facing threats to its core search business and has work ahead when it comes to making money from its AI products, but Pichai appeared unfazed on the call.
"It will play out over time," Pichai said. "I am very excited about the future ahead."
Google did not immediately respond to a request for comment from Business Insider, made outside normal working hours.