During Alphabet’s Q4 earnings call on Wednesday, CEO Sundar Pichai revealed that the company is fully committing to artificial intelligence in 2025. This announcement came alongside a more than 7% drop in Alphabet’s stock prices after the tech giant’s earnings fell short of expectations and the unveiling of an ambitious AI spending plan.
“As AI broadens the types of queries users can make, 2025 is shaping up to be a monumental year for search innovation,” Pichai stated. He noted that the Search function is transitioning from simply displaying a list of links to providing a more interactive, Assistant-style experience. The reception of this shift among users remains uncertain.
Pichai emphasized the evolution of the Search product, stating, “By making it easier for users to interact and ask follow-up questions, we open up further growth opportunities.” He expressed hope that Google’s AI-enhanced Search will improve its relevance, quipping that it should stop suggesting unconventional toppings like glue for pizza.
The company has also disclosed plans to invest around $75 billion in AI capital expenditures this year to remain competitive within the swiftly growing AI landscape. For context, Meta intends to allocate between $60 billion and $65 billion to its AI initiatives in 2025, while Microsoft is set to invest approximately $80 billion.
Nonetheless, it’s becoming less clear whether such high levels of spending are truly justified, especially in light of recent advancements showcased by DeepSeek’s model, which achieves similar performance to OpenAI’s latest offerings but with significantly lower costs and energy usage. Pichai addressed these concerns, stating that Google’s Gemini models are among “the most efficient” available, even when compared to DeepSeek’s V3 and R1 models.
