Google has spent the past year dealing with two of the biggest threats in its 25-year history: the rise of generative AI and the growing drumbeat of regulation. AI, in particular, has shaken the company to its core: it’s made big search changes, realigned the Search, Android, and hardware teams around AI, and launched its own Gemini AI model to capitalize on the opportunity.

Google execs cut projects and laid off employees to refocus, and yesterday, it announced its first-ever dividend and a $70 billion share buyback alongside its Q1 2024 earnings.

Investors, at least, are eating it up: Google parent company Alphabet has finally officially hit and maintained a $2 trillion market cap for a whole day of trading after briefly touching $2 trillion in November 2021. Google is the fourth most valuable public company in the world, behind Nvidia ($2.2 trillion), Apple ($2.6 trillion), and Microsoft ($3.0 trillion). Amazon is currently at $1.8 trillion, and Meta is at $1.1 trillion.

Unlike Meta, whose stock price fell 10 percent after Mark Zuckerberg said it would take years to make money in “massive” bets on generative AI, Google said yesterday that it’s already finding some small ways to sell it — for example, it’s helping advertisers target people with AI in its Performance Max tool and that those advertisers are “63 percent more likely to publish a campaign with good or excellent ad strength.”

The company also says Discover Financial is rolling out AI tools to nearly 10,000 call center agents and that Ikea is seeing an increase in one form of revenue from “value-based bidding solutions.” And while it’s not yet talking about monetizing AI answers in Google Search, CEO Sundar Pichai said, “…we are very confident we can manage the cost of how to serve these queries.”

For now, Google says it doesn’t want to disrupt search too much: “We’re being measured in how we do this, focusing on areas where Gen AI can improve the search experience while also prioritizing traffic to websites and merchants,” said Pichai.

Google’s existing businesses seem to be doing just fine, too: the company made $23.7 billion in profit on $80.5 billion in revenue, according to the Q1 2024 earnings report it released yesterday. Not only is that 15 percent more revenue year over year — it’s 14 percent more profit than it made during the holiday quarter when search and ad revenue were both a bit higher.

And while Google may have cut a thousand-plus employees to help boost those profits, it seems layoffs may have slowed or paused. We reported last quarter that Google spent $700 million on layoffs in January alone, and yet, the new Q1 report shows Google only spent $716 million on “severance and related charges” across January, February, and March.

Q1 search and advertising revenue were each up 14 percent year over year, YouTube ads were up nearly 21 percent, and “subscriptions, platforms, and devices” were up 18 percent year over year — mostly due to premium YouTube subscriptions, said Google chief business officer Philipp Schindler (so not necessarily Pixel 8 sales).

Google said it’s improving its ability to challenge TikTok and Instagram Reels, too, with Schindler talking about how 50 percent more creators are uploading YouTube Shorts shortform videos and how the monetization rate of Shorts has increased 12 percent over the last quarter alone.

Google will host its developer conference, Google I/O, on May 14th.