Google Plans Ads for Gemini
Google plans to insert ads in its Gemini multimodal model, following the recent addition of advertisements in the AI Overviews portion of its search engine as it seeks to recoup the high cost of processing AI workloads. According to Google CEO Sundar Pichai, the company has good ideas for native ad concepts but will prioritize the user experience and ensure scalability for billions of users.
Future of Gemini Ads
Gemini ads are not expected to be available until 2025. Google plans to focus on offering both free and paid versions of Gemini, which competes with ChatGPT. The introduction of ads in AI Overviews has been underway since October, and Google CBO Philipp Schindler has reported that AI Overview ads are performing similarly to traditional Google Search ads.
Google's AI Strategy
Google's core business, search, has faced challenges after an antitrust court case, but the company remains committed to leveraging AI to enhance its search ad business. Alphabet's priority is to preserve its strong search ad business through investments in AI to improve search quality and advertising targeting.
Majority of Alphabet's revenue comes from search, and Google has continuously invested in enhancing its search capabilities. Google's CEO, Sundar Pichai, highlighted the advancements in AI efficiency and performance through models like Gemini 2.0 Flash and Flash Thinking.
Impact of AI Workloads
Google's approach to AI involves optimization and a focus on cost per query to enhance efficiency and performance. The shift in AI workloads from training to inferencing is seen as positive, with a focus on reasoning AI models that use inferencing. Agentic AI is expected to expand the market and create new opportunities for use cases.
Financial Performance and Future Outlook
Alphabet reported strong financial results with net income of $26.5 billion in the fourth quarter, beating estimates. Quarterly revenue growth, although slower than previous years, reflects the company's stability. Alphabet's planned capex investment of $75 billion in data infrastructure demonstrates their commitment to future growth.
Analysts like Malik Ahmed Khan remain optimistic about Alphabet's future, projecting continued leadership in search and advertising despite potential antitrust challenges.
