Google is making a change to its earnings report next quarter that shows just how important AI has become

CEO of Alphabet and Google Sundar Pichai in Warsaw, Poland on March 29, 2022.
Sundar Pichai, the CEO of Alphabet and Google, in Warsaw, Poland, last year.Mateusz Wlodarczyk/NurPhoto via Getty Images
  • Alphabet said in its Q4 earnings press release that it would begin disclosing investments in AI.

  • The move signals the increasing importance of artificial intelligence to the search giant.

  • Q4 earnings showed a slowdown in revenue growth from the previous year.

Google's parent company, Alphabet, announced in its fourth-quarter earnings report that it would change the way it discloses its investments in artificial intelligence.

Going forward, its DeepMind AI research division, which had been buried within the "Other Bets" category, will be reported as part of Alphabet's corporate costs, reflecting its increasing use across the entire company in areas like Google Services and Google Cloud.

"As AI is critical to delivering our mission of bringing our breakthrough innovations into the real world, beginning in January 2023, we will update our segment reporting relating to certain of Alphabet's AI activities," the press release says.

Alphabet's latest move signals to the market that it's serious about investing in the rapidly advancing space. Google has been under pressure by OpenAI and its ChatGPT product, which can respond to queries with human-language responses based on information it has gathered from around the web.

Investors will be watching how the search giant responds to the challenge, as the OpenAI investor Microsoft plans to integrate the chatbot technology into its Bing search engine, The Information reported. It will also incorporate the technology into its Azure cloud offerings so developers can take advantage of the AI technology. Microsoft already offers another OpenAI service, the code-writing tool Codex, through GitHub.

Breaking out its investments in particular projects offers transparency to investors, who can see the exact financial performance of Alphabet's various projects. Alphabet revealed Google Cloud and YouTube's financial performance for the first time in 2020, for instance.

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