Pichai Says Gemini App Has 650 Million Downloads

If there were any questions about what drove Google parent Alphabet towards its first ever quarter of notching more than $100 billion in sales, they were quickly laid to rest on Wednesday night (Oct. 29th).

“We are firmly in the generative AI era,” CEO Sundar Pichai said on the conference call with analysts when the company posted third-quarter numbers after the bell. Double digit growth across several business lines, from search to ads to content, had the common underpinning of artificial intelligence (AI).

Alphabet’s third-quarter results underscored how its AI strategy is driving both growth and scale across its business. Google Cloud, which includes the company’s AI infrastructure and generative AI solutions, saw revenues rise 34% to $15.2 billion, outpacing other divisions. The backlog has grown to $155 billion. Operating income for Cloud more than doubled to $3.6 billion from $1.9 billion a year earlier.

First-party models like Gemini process 7 billion tokens per minute via direct API use from its customers, according to Pichai. The Gemini App now has more than 650 million monthly active users, and queries have tripled from Q2, Pichai said.

AI is driving momentum in search, and AI Overviews are driving meaningful query growth, Pichai said.

“Search and its AI experiences are built to highlight the web, sending billions of clicks to sites every day.” Pichai said. “It’s especially encouraging to see that the effect has been more pronounced with younger people.”

Enterprise remains a growth area in cloud, Pichai said, as the number of GPT customers increased by about 34% year over year.

“We are signing larger deals,” Pichai said of the cloud segment momentum, “as we’ve signed more deals over $1 billion in Q3 than in the previous two years combined.”

Revenues from products built on the company’s generative AI models grew by 200%, Pichai said, year over year.

Momentum Across Search and YouTube

The company has cross the 300 million mark in paid subscriptions, Pichai said, led by Google One and YouTube Premium. With a nod to YouTube Shorts, Pichai said that this business “earns more revenue per watch hour than traditional ‘in-stream’” content.

Philipp Schindler, CBO, said in his own remarks that Services revenues were $87 billion for the quarter, up 14%, tied to search and YouTube. Search and Other, as a category, was up 15% in revenues to $56.5 billion, with growth seen across all verticals, most notably retail and financial services. YouTube saw 15% growth in advertising revenues to $10.3 billion, driven by direct response.

Schindler also pointed to shopping capabilities that have been added to AI Mode.

“We’ve expanded try on capabilities to more clothing items, now available to anyone in the U.S. We’re making it easier for consumers to benefit from deals through new loyalty offerings like personalized annotations in organic results and ads … AI Max, he said, helps advertisers discover new customers at the exact moment they need a product or service,” Schindler said.

Anat Ashkenazi, CFO, noted that the $102.3 billion in consolidated top line, was up 15% year on year. Technology related costs of $14.9 billion were 8% higher than a year ago. “Other Bets” revenue was $344 million, and the operating loss in this segment was $1.4 billion. The company is devoting more resources to businesses including Waymo.

During the question and answer session, analysts asked about agentic eCommerce. Schindler said, “This is all early, but we see agentic experiences, really, as additive to the way people seek information … it helps people get stuff done and it helps businesses in the process. We’re working on multiple agentic experiences across key verticals such as travel, commerce and shopping … when we think of an agentic shopping future, it has to be one that benefits both the users and merchants,” which he said comes from features like agentic checkout.

Alphabet’s stock was up 4% in after hours trading.