Updated at 10:07 am EST
Google main alphabet (GOOGLE) – Get a free report Shares rose in early trading on Wednesday after a report suggested the tech giant was preparing a major restructuring of the world's largest advertising platform, a move linked to growth in ai-generated sales.
The Information reported that Google, which operates both the search engine of the same name and the video-sharing website YouTube, is increasing its reliance on artificial intelligence-generated ads that can be sold to customers around the world.
The sales, which are largely automated, generate tens of billions in sales at a much wider margin than traditional advertising-related revenue overseen by human employees.
As a result, The Information reported, in the coming months Google is looking to reorganize its 30,000-person advertising sales team, with potential staff cuts pending.
Google ad sales on YouTube increased
Google reported a record $59.65 billion in overall advertising revenue for the three months ending in September. The figure was led by YouTube sales, which increased 12.4% to $7.95 billion. Search and other revenue increased 11% to $44.03 billion.
Looking ahead to 2024, analysts believe the impending presidential election, along with the Summer Olympics in Paris and the UEFA Euro 2024 soccer tournament, will boost global advertising sales. The development of artificial intelligence technologies is expected to generate greater profits for Meta Platforms, owners of Google and Facebook. (GOAL) – Get a free report.
“Given the scale of Meta and Google, we believe the benefits of ai are coming to these platforms,” JMP Securities analyst Andrew Boone said in a recent client note.
“Specifically, Meta and Google have the largest user bases and data corpuses with significant engineering and infrastructure resources,” he added.
“To that end, both companies have clear advantages of ai improving products for users and advertisers, and as the technology matures, we expect this to translate into sustained revenue growth in 2024.”
Google shares rose 2.99% in early trading on Wednesday, the highest level in more than two months, to trade at $140.73 each.
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