Google Fails to ‘Wow’ as AI Bills Mount
Advertising business faces tough growth comparisons, while AI spending continues to surge
3 min
It’s good to be Google these days. But it isn’t easy, and it will keep getting harder.
Second-quarter results from parent company Alphabet on Tuesday afternoon showed strength in advertising and cloud revenue along with a record high in operating profit as the Silicon Valley titan, once known for lavish employee perks, continues to clamp down on most costs, save for those designed to build out generative artificial intelligence capabilities .
But the results also offered “no excitement,” in the words of Jefferies analyst Brent Thill . Overall revenue exceeded Wall Street’s consensus projection by just 0.6%—the lowest beat percentage in at least five years, according to FactSet. YouTube advertising revenue also came in lower than analysts expected. Alphabet’s previous report, three months ago , offered bigger positive surprises in both revenue and earnings growth, with the announcement of the company’s first-ever dividend thrown in for good measure. Alphabet’s stock had jumped nearly 17% since that report; the shares gave up about 4% in premarket trading on Wednesday.
Tuesday’s results also set the stage for what might be a more challenging second half of the year. For one, comparisons will be tougher as the second half of last year had Google nearly recovered from an earlier advertising slump. Google also didn’t fully ramp up its spending on AI infrastructure until well into the second half of 2023; capital expenditures in the first half of 2023 were barely half of the $25.2 billion the company has spent in the first half of this year.
That spending won’t be taking a breather any time soon, even as Google has pared back other costs and even brought its head count down by more than 1,300 positions in the most recent quarter. Alphabet said Tuesday that capex will be at or above $12 billion a quarter for the second half of the year, likely leading to a total outlay of more than $49 billion for the year—84% higher than what the company has averaged annually over the past five years.
“Look, obviously we are at the early stage of what I view as a very transformative area,” Alphabet Chief Executive Sundar Pichai said during Tuesday’s earnings call when asked by an analyst about the company’s AI investments. He added that “the risk of underinvesting is dramatically greater than the risk of over investing for us here,” not mentioning the record amounts of capex that tech rivals Microsoft , Amazon.com and Meta Platforms are pouring into the same thing.
Google has the resources: Alphabet’s net cash pile of nearly $98 billion is substantially bigger than those of even its deep-pocketed peers. But putting that money to work is getting to be a challenge. The Wall Street Journal reported Monday that Google’s talks to acquire cybersecurity startup Wiz have fallen apart. The purported $23 billion deal would have been Google’s largest ever and most certainly would have drawn the type of close regulatory scrutiny that has lately been keeping tech mergers in limbo for 18 months or more. Such an uncertain payoff reportedly was a concern among Wiz and its investors; Google’s acquisition of Fitbit in 2021 for less than one-tenth that price took nearly 15 months to close.
Google is also going back to the drawing board on a long-running plan to phase out the use of internet tracking technology known as “cookies,” despised by privacy advocates but depended upon by advertisers. Google was building up an alternative technology called “privacy sandbox,” but that plan drew a lot of opposition from advertisers and regulators worried that it would further cement the company’s internet advertising dominance. Google said Monday it would instead offer users a prompt to allow them to opt out of cookie tracking.
That move is unlikely to dent Google’s powerful search ad business. But that and the failed Wiz talks show the growing constraints the company is operating under as regulators look even more closely at big tech’s position, and judges and juries start weighing in. A verdict in the federal government’s antitrust case against Google is expected before the end of the year and could result in a ruling that would seek a breakup of the $250-billion-a-year advertising juggernaut.
Google’s latest results were good, but good isn’t always enough.
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The lunar flyby would be the deepest humans have traveled in space in decades.
4 min
It’s go time for the highest-stakes mission at NASA in more than 50 years.
On April 1, the agency is set to launch four astronauts around the moon, the deepest human spaceflight since the final Apollo lunar landing in 1972.
The launch window for Artemis II , as the mission is called, opens at 6:24 p.m. ET.
National Aeronautics and Space Administration teams have been preparing the vehicles to depart from Florida’s Kennedy Space Center on the planned roughly 10-day trip. Crew members have trained for years for this moment.
Reid Wiseman, the NASA astronaut serving as mission commander, said he doesn’t fear taking the voyage. A widower, he does worry at times about what he is putting his daughters through.
“I could have a very comfortable life for them,” Wiseman said in an interview last September.
“But I’m also a human, and I see the spirit in their eyes that is burning in my soul too. And so we’ve just got to never stop going.”
Wiseman’s crewmates on Artemis II are NASA’s Victor Glover and Christina Koch, as well as Canadian Space Agency astronaut Jeremy Hansen.
What are the goals for Artemis II?
The biggest one: Safely fly the crew on vehicles that have never carried astronauts before.
The towering Space Launch System rocket has the job of lofting a vehicle called Orion into space and on its way to the moon.
Orion is designed to carry the crew around the moon and back. Myriad systems on the ship—life support, communications, navigation—will be tested with the astronauts on board.
SLS and Orion don’t have much flight experience. The vehicles last flew in 2022, when the agency completed its uncrewed Artemis I mission .
How is the mission expected to unfold?
Artemis II will begin when SLS takes off from a launchpad in Florida with Orion stacked on top of it.
The so-called upper stage of SLS will later separate from the main part of the rocket with Orion attached, and use its engine to set up the latter vehicle for a push to the moon.
After Orion separates from the upper stage, it will conduct what is called a translunar injection—the engine firing that commits Orion to soaring out to the moon. It will fly to the moon over the course of a few days and travel around its far side.
Orion will face a tough return home after speeding through space. As it hits Earth’s atmosphere, Orion will be flying at 25,000 miles an hour and face temperatures of 5,000 degrees as it slows down. The capsule is designed to land under parachutes in the Pacific Ocean, not far from San Diego.
Is it possible Artemis II will be delayed?
Yes.
For safety reasons, the agency won’t launch if certain tough weather conditions roll through the Cape Canaveral, Fla., area. Delays caused by technical problems are possible, too. NASA has other dates identified for the mission if it doesn’t begin April 1.
Who are the astronauts flying on Artemis II?
The crew will be led by Wiseman, a retired Navy pilot who completed military deployments before joining NASA’s astronaut corps. He traveled to the International Space Station in 2014.
Two other astronauts will represent NASA during the mission: Glover, an experienced Navy pilot, and Koch, who began her career as an electrical engineer for the agency and once spent a year at a research station in the South Pole. Both have traveled to the space station before.
Hansen is a military pilot who joined Canada’s astronaut corps in 2009. He will be making his first trip to space.
Koch’s participation in Artemis II will mark the first time a woman has flown beyond orbits near Earth. Glover and Hansen will be the first African-American and non-American astronauts, respectively, to do the same.
What will the astronauts do during the flight?
The astronauts will evaluate how Orion flies, practice emergency procedures and capture images of the far side of the moon for scientific and exploration purposes (they may become the first humans to see parts of the far side of the lunar surface). Health-tracking projects of the astronauts are designed to inform future missions.
Those efforts will play out in Orion’s crew module, which has about two minivans worth of living area.
On board, the astronauts will spend about 30 minutes a day exercising, using a device that allows them to do dead lifts, rowing and more. Sleep will come in eight-hour stretches in hammocks.
There is a custom-made warmer for meals, with beef brisket and veggie quiche on the menu.
Each astronaut is permitted two flavored beverages a day, including coffee. The crew will hold one hourlong shared meal each day.
The Universal Waste Management System—that’s the toilet—uses air flow to pull fluid and solid waste away into containers.
What happens after Artemis II?
Assuming it goes well, NASA will march on to Artemis III, scheduled for next year. During that operation, NASA plans to launch Orion with crew members on board and have the ship practice docking with lunar-lander vehicles that Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin have been developing. The rendezvous operations will occur relatively close to Earth.
NASA hopes that its contractors and the agency itself are ready to attempt one or more lunar landing missions in 2028. Many current and former spaceflight officials are skeptical that timeline is feasible.
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