Google will continue to go all in on AI in 2025, CEO Sundar Pichai announced during the company’s Q4 earnings call Wednesday. Alphabet shares have since dropped more than 7% on news that the company giant fell short of fourth-quarter revenue expectations and announced an ambitious spending plan for its AI development.
“As AI continues to expand the universe of queries that people can ask, 2025 is going to be one of the biggest years for search innovation yet,” he said during the call. Pichai added that Search is on a “journey” from simply presenting a list of links to offering a more Assistant-like experience. Whether users actually want that, remains to be seen.
“I think the [Search] product will evolve even more,” Pichai continued. “As you make it more easy for people to interact and ask follow-up questions, etc., I think we have an opportunity to drive further growth.” And with any luck, Google’s AI empowered Search of tomorrow will stop recommending glue as a pizza topping.
The company also announced that it plans to spend about $75 billion in AI capital expenditures this year in an effort to keep up with the rest of the rapidly growing AI market. For comparison, Meta has announced that it plans to spend between $60 billion and $65 billion on its AI efforts in 2025 while Microsoft has committed $80 billion in AI capital expenditures.
However, it is increasingly unclear if those levels of expenditure are actually necessary, given the efficiency revelations emerging from DeepSeek’s recent model unveiling, which offers comparable performance to OpenAI’s latest models but at a fraction of the cost and power consumption. Pichai played down some of those concerns during the call, stating that Google’s Gemini family are, “some of the most efficient models out there, including comparing to DeepSeek’s V3 and R1.”
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