Google Earnings: Moving the Ball Forward on AI

A thought on the quarter. Google reported Sept-17 results tonight highlighted by 24% fxn revenue growth, comparable to 2016 growth and above 2015 which was 20%. It’s worth taking a step back to recall investors concern from 2 years ago that revenue growth was going to drift lower from the high teens to the high single digits by the end of 2017. September results show growth rates are running 2x higher than what investors had predicted back in 2015. The reason is Google has three properties that 1.5B+ people can’t live without, including Search, Maps, and Youtube. Going forward, we expect the company to add increasing ease of use, utility, and monetization efforts to these products that will result in 15-20% revenue growth for the foreseeable future.

Sundar leads off with AI for 4th consecutive quarter. It’s clear that Sundar is trying to get his point across: AI is the future of Google. We went back and looked at his opening comments over the last year and found he has lead his prepared remarks by asserting Google’s evolution from a mobile to an AI-first company on each of the past four earnings calls. below are his opening remarks over those four quarters.

  • Sept-17 – “Thank you, Ruth. We had another great quarter. (omitting 1 line) Even though we are in the early days of AI, we are already rethinking how to build products around machine learning. It’s a new paradigm compared to mobile first software, and I’m thrilled how Google is leading the way.”
  • Jun-17 – “Thanks, Ruth. We had a phenomenal quarter. Google continues to lead the shift to AI-driven computing.”
  • Mar-17 – “Thanks, Ruth. It’s been a terrific start to the year. (omitting 10 lines) Now turning first to machine learning and access to information. I’m really happy with how we are transitioning to an AI-first company.”
  • Dec-16 – “Thanks, Ruth. 2016 was a great year for Google and 2017 is shaping up to be even more exciting. (omitting 11 lines) First, machine learning and access to information. As I’ve shared before, computing is moving from a mobile­first to AI­-first with more universal, ambient and intelligent computing that you can interact with naturally, all made smarter by the progress we are making with machine learning.”

Buzzword Bingo. For the same four quarters, we tracked how many times presenters and analysts made comments artificial intelligence by tallying instances of AI jargon (AI, artificial intelligence, machine learning, deep learning, TensorFlow, natural language processing). We also noted mentions during prepared remarks vs. those during Q&A. This is evidence of the intensity level at which Google is pursuing AI.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.