“This still feels like early days and a long ways to go,” Google CEO Sundar Pichai said of the company’s AI journey and that of its customers.
Interest in Google’s artificial intelligence products grew during its most recent quarter despite economic uncertainty–perhaps a sign to solution providers that the AI era can weather any business effects from global tariffs.
The company’s CFO also said the Mountain View, Calif.-based AI and cloud vendor will keep up its expected $75 billion capital expenditures this year–up from $50 billion the year prior–as it continues to see greater customer demand for cloud and AI offers compared to available capacity.
The news comes from the Thursday quarterly earnings call of Google Cloud’s parent company, Alphabet, for its first quarter ended March 31.
Alphabet and Google CEO Sundar Pichai (pictured) said on the call that within the company, the number of employees accepting AI-suggested code has exceeded 30 percent, growing from the 25 percent measure Pichai revealed in October.
“The early use cases have been transformative in nature,” Pichai said. “This still feels like early days and a long ways to go.”
Google Q1
Pichai was scant on details around Google’s upcoming $32 billion acquisition of cybersecurity vendor Wiz, but he did say he believes Wiz will “make it easier and faster for organizations of all types and sizes to protect themselves end-to-end and across all major clouds.”
“We think this will help spur more multi-cloud computing, something customers want,” he said.
During the call, Philipp Schindler, senior vice president and chief business officer for Google, said the insurance, retail, health care and travel sectors showed strength in advertising spending–perhaps a sign for solution providers of the sectors resisting any effects on business from a changing economy under global tariffs.
Controlling Costs
On CapEx, the vendor spent $17.2 billion in the first quarter, “primarily reflecting investment in our technical infrastructure, with the largest component being investment in servers, followed by data centers,” Anat Ashkenazi, Google CFO and senior vice president, said on the call.
Ashkenazi described the cloud demand supply environment as “tight” with revenues “correlated with the timing of deployment of new capacity.”
“We could see variability in cloud revenue growth rates depending on capacity deployment each quarter,” she said. “We expect relatively higher capacity deployment towards the end of 2025.”
The vendor is working to offset depreciation headwinds to its income statement after increased CapEx spending over the years in part to meet growing demand for cloud and AI products. The vendor saw 31 percent growth year over year in depreciation. Ashkenazi expects the rate to increase throughout the year.
“We want to make sure we ramp up to support customer needs and customer demands,” she said.
To control costs, Alphabet has moderated the pace of compensation growth, consolidated teams, and reevaluated its real estate footprint and the build-out and use of technical infrastructure across the business, Ashkenazi said.
“We’re looking at–how do we make sure every dollar is used efficiently,” she said. “We have a highly rigorous process to determine the demand behind it, and then the allocation of the compute associated with our technical infrastructure investments, ensuring that we’re utilizing that appropriately and that we’re highly efficient with everything we’re doing.”
AI Interest Growth
Pichai shared a variety of measures to illustrate the growing use of Google’s various AI products–including some parts of the Google portfolio with solution provider attachment.
The Google Workspace productivity applications suite delivers more than 2 billion AI assists a month, he said. These assists include summarizing email and refining documents.
A multimodal AI-powered search capability called “circle to search” on Pixel and Samsung Galaxy devices is now available on more than 250 million devices with usage increasing nearly 40 percent in the quarter. Monthly visual searches with Google Lens increased by 5 billion since October.
Other stats Pichai cited include:
- Active users in Google AI Studio and Gemini’s application programming interface (API) have grown more than threefold since the beginning of the year
- Google’s Gemma 3 open model has been downloaded more than 140 million times
- The AlphaFold protein structure prediction AI has been used by more than 2.5 million researchers
Pixel, Samsung S25 and all other Android devices are upgrading to the Gemini Live camera and screen sharing. Google Assistant in Google hardware is upgrading to Gemini. The vendor plans to upgrade tablets, cars, and phone-connected devices including headphones and watches “later this year,” Pichai said.
Pichai told analysts on the call that the vendor is “seeing tremendous reception from developers, enterprises and consumers” to its Gemini 2.5 Pro and Flash models.
“We have the best model out there now,” Pichai said. “That’s going to drive increased adoption as well.”
Google is also “the leading cloud solution for companies looking to the new era of AI agents–a big opportunity,” Pichai said.
He said it is still “very early days” for reception to the AI Mode search mode that expands AI Overviews with improved reasoning, thinking and multimodal capabilities.
“People are typing in roughly 2x longer queries compared to traditional search,” he said. “There’s a lot more complex, nuanced questions. … The fast response time and the fact that they can, kind of, be much more open ended. It can undertake more complicated tasks–product comparisons, for example, has been a positive one. Exploring how to plan a trip. Those are the kinds of early feedback we are seeing.”
A Channel Future For Waymo?
Answering what Pichai said was the first analyst question about Waymo on an earnings call, the CEO said that Google’s self-driving car subsidiary has “a variety of optionality in business models across geographies” as use grows and requires “a successful ecosystem of partners.”
Pichai called out Uber as an early partner for expanding paid service in Silicon Valley and Moove.io as a fleet management partner in Phoenix. But the company is exploring more original equipment manufacturer (OEM) partnerships.
“We are widely exploring and, but at the same time, clearly staying focused and making progress–both in terms of safety, the driver experience–and progress on the business model and operationally scaling,” Pichai said. “We’ve been … laser-focused, and will continue to be, on building the world’s best driver.”
Although Waymo’s channel potential is likely in its early days, Pichai said that Waymo serves over 250,000 paid passenger trips each week, up fivefold year over year.
Waymo will launch in Atlanta later this summer, with Washington, D.C., and Miami going live in 2026. The technology continues to progress on airport access and freeway driving, Pichai said.
Google Q1 In Depth
Google Cloud brought in $12.3 billion in revenue for the quarter, up 28 percent year over year. The core and AI Google Cloud Platform (GCP) products’ growth rate “was much higher than Cloud’s overall revenue growth,” Ashkenazi said.
Cloud saw an operating income of $2.18 billion. Workspace saw an increase in average revenue per seat, the CFO said, without sharing numbers.
Alphabet’s revenue for the quarter was $90.2 billion, up 14 percent from one year before, ignoring foreign exchange. Alphabet’s stock traded at about $169 a share after hours Thursday evening, up about 4.5 percent.