Google announced its quarterly earnings this week, looking back at a surprisingly successful first quarter of 2023, managing to exceed expectations. Even though it’s a bit slow in the race to AI, hastily reacting to OpenAI’s ChatGPT and Bing Chat with a slapped together event, the company is still widely profitable, and its operations don’t seem to be affected by the downturn hitting businesses across the tech sector.

If you want some numbers, Google’s total revenue in Q1 2023 is $69.7 billion, roughly $1.7 billion more than in Q1 2022. The section that contributed the most to the growth is Google Cloud, which comprises Google’s enterprise tools like Workspace, web hosting, and other enterprise services. Fittingly, Workspace was only recently increased in price. This is also the first time that Google is breaking even on its Cloud business. Previously, this part of the enterprise routinely made losses. At the same time, Google’s biggest section, Google Services, didn’t experience much of a growth. The company made slightly more revenue than the quarter before here, but gained slightly less in total income.

During the first quarterly earnings call this year, Google also reiterated its commitment to AI. The company mentioned its newly combined AI team, composed of DeepMind and Google Research team members, which is supposed to help supercharge Google’s efforts in the area. This also means that DeepMind is now no longer reported as part of Google’s Other Bets but rather its unallocated corporate costs.

Google’s wins this quarter come at a cost, though. The company has drastically reduced spending, killing a few of its moonshot projects which are meant to discover the next big thing before it’s there, which might have negative implications much further down the road. Google is also criticized for firing a significant portion of its workers for the first time in the company’s history after experiencing a few years of incredible growth during the pandemic. Despite this, the company's workforce still grew from roughly 163,000 to 190,000 compared between Q1 2022 and Q1 2023. The business is also cutting employee benefits and takes a more cautious approach to business expenses, like more rigorous travel budgets.

Overall, the next few years are going to be much more interesting for Google. While AI may feel like just yet another fad, generative language products and image generation tools already have actual use cases. That's something that can’t necessarily be said for the metaverse or crypto, both of which are industries that Google mostly avoided entering.

The race for the best AI products has just begun, and Google likely won’t be able to rely on its legacy moneymakers like search and advertising indefinitely. Google I/O 2023, the company's developer conference scheduled for May 10, will certainly be interesting.