This week sees a number of tech companies announce their quarterly results, and unsurprisingly, AI has been high on the agenda across earnings calls. Alphabet, Snap and Reddit all posted substantial year-on-year gains on Tuesday, and all cited AI developments as revenue drivers, albeit in different ways.
Alphabet
AI was the sole topic of CEO Sundar Pichai’s comments, saying the company was “uniquely positioned to lead in the era of AI” due to its full-stack approach to the technology. Alphabet has built its own AI chip (Trullium) and GenAI chatbot (Gemini), which is now used on all the company’s products and platforms. Pichai also cited the cost efficiencies driven by Google’s AI Overviews, which summarise Search results, adding that ads integrated into the product are “performing well.”
Meanwhile AI helped drive 35 percent YoY revenue growth in Alphabet’s Google Cloud business, according to the company. Pichai said customers such as Snap use its enterprise AI platform, Vertex, to build foundation models. “When Snap was looking to power more innovative experiences within their ‘My AI’ chatbot, they chose Gemini’s strong multimodal capabilities,” said Pichai. “Since then, Snap saw over 2.5 times as much engagement with My AI in the United States.”
Alphabet’s revenues rose 15 percent YoY during the quarter, sending the tech giant’s shares up by 6 percent following the results.
Snap
Snap itself stressed the benefits of its AI investments during its own earnings call, using the technology for consumer and advertiser-facing products, including its augmented reality (AR) glasses and developer platform. But the company also mentioned the increased infrastructure costs driven by AI investments, adding that eCPMs were down as inventory growth outpaced advertiser demand.
Nevertheless, Snap’s revenues climbed 15 percent YoY, noting that AI developments are driving engagement on Snapchat. The company began testing a text-to-video GenAI tool during the quarter, and said the number of creators posting content climbed by around 50 percent YoY, while total time spent watching content increased 25 percent YoY during Q3.
The company also touted its investments in machine learning for content personalisation on Snapchat, aiming to make the app more competitive with TikTok and Instagram. “In Q3, we enhanced our Spotlight recommendation system to better represent Snapchatters’ interests and preferences based on historical signals, launched models optimised for new Snapchatters, and deployed multimodal ML models to improve recognition of video, text and audio content submitted by Creators,” said Snap CEO Evan Spiegel.
For Reddit, it was AI partnerships that appear to be driving revenues for the social sharing company, posting a 68 percent YoY increase during Q3. In February the company signed a $60 million-per-year deal with Google to make its content available for training the search giant’s AI models, then struck a similar deal with OpenAI in May. Reddit’s “Other” revenue segment, which includes data licensing revenue, soarded 547 percent YoY in Q3.
Reddit is also using machine learning for translation purposes in order to attract new users, according to the company, trialing the technology for translations into French, Spanish, Portuguese, Italian, and German. “This quarter, machine translation drove four times more users than last quarter, and based on the success we’ve seen so far, we plan to expand machine translation to over 30 countries through 2025,” said Reddit CEO Steve Huffman.
And next year Reddit plans to update its search products by integrating large language models (LLMs) to improve search results. The updates boosted investor confidence in Reddit’s ability to attract advertisers, sending the stock price up 25 percent.
