Alphabet Inc. — 2023 Q2

Thanks, Eric. On the first part, obviously, a big topic. I would broadly say, the investments for AI, when you look at the type of deep computer science work, the talent we have worked hard to bring to the company and from the ground up, the infrastructure we have built, from the earliest days Google has been a company, we've thought about the switches in our data centers. Wherever we think we can do the best and get an advantage by innovating, we have chosen to do so.

Just to underscore, when you ask the point about impact, one of the places Sundar and I have discussed quite a bit is landing well the 2024 capital plan and the multiyear plan and completing all of the very important efforts we have underway. We're excited about what they mean, setting the company up well to be able to invest for long-term growth. And so we're continuing to execute against those. And then I think Sundar summarized it well. We see technology can make such a difference in the lives of so many and there's lives of economies. And to be able to focus on the impact on economic growth and the opportunity for people, for organizations for countries, I think, is a privilege. I'm really excited about it, in particular, with this amazing company. And so focusing there as well as the investments that we make across Alphabet to drive economic growth globally across numerous sectors.

Look, on the Search Generative Experience, we definitely wanted to make sure we're thinking deeply from first principles. While it's exciting new technology, we've constantly been bringing in AI innovations into Search for the past few years, and this is the next step in that journey. But it is a big change so we thought about from first principles. It really gives us a chance to now not always be constrained in the way Search was working before allowed us to think outside the box. And I see that play out in experience. So I would say we are ahead of where I thought we'd be at this point in time.

In terms of CapEx, I tried to lay out sort of the cadence of CapEx, and the point was an important one that the sequential step-up in the second quarter was lower than anticipated for the 2 reasons I noted: one, the work that we're doing around office facilities; and then the delays in certain data center construction projects. That's why we wanted to be really clear that we do expect elevated levels of investment in our technical infrastructure, and that would be increasing through the back half of 2023, consistent with the comments we've made previously that we expected 2023 to be higher given the slower start at the front half of the year and then continuing to grow into 2024.

Maybe I can give some color here. We have obviously been focused on bringing this experience and making sure it works well for users. And it's very clear to me, first of all, as a user myself, there are certain queries for which the answers are so significantly better. It's a clear quality win. And so I think we are definitely headed in the right direction, and we can see it in our metrics and the feedback we are getting from our users as well.

Thanks, Justin. Okay. It is an exciting moment overall in Cloud because there is definitely a lot of interest from customers on AI, and they definitely are engaging in many more conversations with us. So I would say, without commenting on the short term, but when I think about it long term, I view the AI opportunity as expanding our total addressable market and allows us to win new customers. Scale of investments that we can directly bring to Cloud now. As I said earlier, we have over 80 models across Vertex, Enterprise, Search and Conversational AI, and we are taking all of them, translating it into deep industry solutions. So I'm excited about it.

So we -- I don't think we commented on that. And yes, in the second quarter, GCP growth was above the growth rate for Cloud overall.

Maybe I can comment on the -- how we think about R&D. And look, if anything, I think 2 things. We are always committed to driving deep computer science research and innovation. That's the foundation on which the company is built. And taking that and applying it and building new products and services and generating value is the virtuous cycle. And so nothing changes in that fundamental thesis.

Yes. Look, I can't comment on others, but our focus continues obviously to be helping customers through whatever uncertainty or complexity they're facing, and a lot of companies are focused on profitability, driving efficiencies, and they're carefully evaluating the effectiveness of their budgets. And our goal is really to help them maximize efficiency and drive strong ROI.

Yes. Look, this is a great question. AI is a foundational component that really allows us to help users, advertisers, [ publishers ] and partners at scale. And we've been on a journey for years, right, to take the key components of advertising, whether it's bidding, targeting and creatives as well as innovation, frankly, in the core advertiser and publisher experiences and improve them dramatically through AI.

Look, as I said earlier, generative AI is supercharging new and existing ads products with really tons of potential ahead. And we're really helping advertisers here make better decisions, solve problems, enhance creativity. And I covered this earlier. For example, we launched a new conversational experience in Google Ads, the asset creation flow. In PMax, I mentioned the automatically created assets, the Product Studio and so on.

And I think all of this is before we have multimodal capabilities really in the mix. And so looking at the early innovations there, I think it's going to be an exciting couple of years ahead. Thanks, Mark.

Thanks, everyone, for joining us today. We look forward to speaking with you again on our third quarter 2023 call. Thank you, and have a good evening.