Google Surges Past $2 Trillion Market Cap Amid Ongoing AI Challenges

Google has officially reached a market capitalization of $2 trillion, a significant milestone for the tech giant. While Alphabet briefly hit this mark in 2021, Google has now surpassed it comfortably, maintaining this valuation for an entire day.

For the first time, Google will make Gemini 1.5 Pro accessible to the public for the upcoming Google Next event. But wait, this AI can now hear what you say in calls or videos. (Photo: Pawel Czerwinski from Unsplash)

Achieving a Market Capitalization of $2 Trillion

Over the past year, Google has faced significant challenges, including the emergence of generative AI and increased regulatory scrutiny.

These challenges have prompted strategic adjustments within the company, such as restructuring its teams around AI and launching its own Gemini AI model.

In response to market dynamics, Google executives have made tough decisions, including cutting projects and restructuring its workforce.

Yesterday, alongside its Q1 2024 earnings report, Google announced its inaugural dividend payout and a $70 billion share buyback program.

The Verge reported that investors are enthusiastic as Google's parent company, Alphabet, has achieved and sustained a market capitalization of $2 trillion for an entire trading day. This milestone follows a brief touch of the $2 trillion mark in November 2021.

Google's Position Among Tech Giants

Google now stands as the fourth most valuable publicly traded company globally, trailing behind Nvidia ($2.2 trillion), Apple ($2.6 trillion), and Microsoft ($3.0 trillion). Amazon and Meta currently hold market caps of $1.8 trillion and $1.1 trillion, respectively.

While Meta faced a significant setback with a 10 percent decline in its stock price following Mark Zuckerberg's announcement about the lengthy timeline to profit from substantial investments in generative AI, Google has taken a different approach.

In contrast, Google revealed that it has already begun monetizing AI in various ways. For instance, the company disclosed that it is leveraging AI in its Performance Max tool to assist advertisers in targeting specific demographics.

Advertisers utilizing AI in this tool are experiencing a 63 percent increase in the likelihood of launching campaigns with excellent ad strength.

Additionally, Google announced that Discover Financial is implementing AI tools across approximately 10,000 call center agents, while Ikea is reporting a rise in revenue attributed to "value-based bidding solutions."

Although Google has refrained from discussing the monetization of AI-generated answers in Google Search, CEO Sundar Pichai expressed confidence in the company's ability to effectively handle the costs of serving these queries.

Google emphasizes a cautious approach to evolving its search functionality.

Pichai states that they are taking a measured approach, focusing on areas where Gen AI can enhance the search experience while also prioritizing traffic to websites and merchants.

Moreover, Google's core businesses continue to thrive, as indicated by its Q1 2024 earnings report, which was released yesterday.

The company reported a profit of $23.7 billion on revenue of $80.5 billion, marking a 15 percent increase in revenue year over year. This profit surge, 14 percent more than the previous holiday quarter, occurred despite a slight decline in search and ad revenue.

Although Google previously implemented layoffs to bolster profits, recent financial reports suggest a slowdown or temporary halt in this trend.

While the company allocated $700 million for layoffs in January alone, the Q1 report reveals that Google spent only $716 million on "severance and related charges" throughout January, February, and March.