Google has managed to limit the costs of using AI to generate results.
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The search giant created a tool called "AI Overviews" that sees search results generated by artificial intelligence presented alongside its conventional list of relevant websites. Such tools are seen as necessary given the explosion of interest in generative AI – which Microsoft and OpenAI have promoted as a good way to find information online.
Generative AI is therefore a colossal challenger to Alphabet's core search and advertising business. That means Google has to deliver a great AI experience of its own and keep costs down while doing so — no mean feat, given that it's spent decades fine-tuning its computing infrastructure but now has to bring in dedicated AI-centric hardware.
Investors may rightly be concerned that this would reduce margins. But on Alphabet's Q2 2024 earnings call on Tuesday, CEO Sundar Pichai assured them that Google has managed to keep the costs of AI overviews flat. He also mentioned ongoing work to reduce latency so that AI insights arrive quickly, adding "we're focused on matching the right model size to the complexity of the query to minimize the impact on cost and latency."
