Roth MKM’s Rohit Kulkarni talks Google’s AI ambitions earlier than developer conference

The battle for AI Supremacy heating up as alphabet prepares for the Google IO developer conference in less than 24 hours Google's expected to announce its latest slate of AI advancements this on the heels of open AI event today where they announced a new AI model and a desktop version of chat GPT here to discuss is Rohit karney senior research.

Analyst at Roth mkm Rohit good to see you so Google has an interesting Advantage here and that it can build its AI Direct ly into Android into the pixel into apps like maps and people will use it as long I guess as it's good is is that what you expect to see uh hey uh I think the AI Stakes for Google are higher today after uh open.

Ai's event today I think um uh Google has the best possible distribution Channel across Enterprise and consumer as you just said uh John they have the workspace apps and they have the uh direct to Consumer apps so smallest tweaks in any AI model as in uh uh a lot of Enterprises and billions of consumers start to benefit right away so I think.

That's the advantage and that's why uh uh Google H is the AI Pioneer with both Tech Innovation and distribution now particularly when we're talking about things like conversational AI it seems to me that that's a mobile Centric use case and they've already got this massive install base so uh how much pressure does that put on them to both.

Get the right uh use cases that people will actually enjoy using versus some of the complaints that met is getting on on the way they' built it into Facebook and on Apple to perhaps choose somebody different than Google so that they don't end up improving Android uh as they benefit on the iPhone yeah absolutely I think uh the the second point over there.

John about the Apple relationship is is very key uh what Google can uh tell us uh tomorrow this week uh with regards to the mobile AI assistant improving the mobile search and making search multimodal search understands text very well they can understand images and they can understand voice to a certain degree but imagine all of those three together.

That's what open AI is trying to tell us that they are better at today but uh I think what Google needs to do this week is show that search has better multimodal capabilities than anybody else and that's why uh they uh continue to work with apple uh next month a factor I think tends to be undervalued is how AI gets used buy developers to.

Build apps more quickly if we look at this very profitable shift that Apple has done toward its own M series chips for example on the Mac a big part of the reason why they were able to do that is because they had developer tools that made it easy for developers to translate their app so how do you see that factor uh developer tools driven by AI playing.

In here here in these dual developing uh developer conferences yeah absolutely I think uh with regards to the tools for the developer Community remember Google IO started as that now we are in the 16th year where it was initially only a tech only conference and then suddenly investors and people like you and me started to show up in hordes as AI.

Started to uh become more front and center of the conversation there and uh what Google has has two interesting assets they have the cloud to host the apps and they have the AI apis to enable those uh apps using their Gemini model so I think uh making it making it as frictionless as possible for developers is is something that Google has tried to.

Do and I feel uh if they take it a step further this week that is going to be a game Cher uh for developers to essentially be very locked into to the entire Google ecosystem to build apps host apps and then uh grow those apps how do you think Google alphabet is positioned on costs should these AI applications catch on which is going to.

Need to ramp up faster the cost to actually deploy them at in quality way or their ability to monetize them on the other end uh I I think costs uh probably ramp uh in the near term uh Google has already indicated that uh um capex this year is going up uh almost 50% they're going to be spending up almost $50 billion uh in capex and almost vast.

Majority of that is going towards uh building out their AI infrastructure so probably uh the worry for investors is Google eats up some of the costs in the near-term um as they uh help developers grow their AI apps with the hopes to monetize them uh in 25 and 26 but near term probably that creates a cost headwind uh but um uh I think so far.

What Google has done is reduce their cost basis in other parts of uh the business uh with hopes to eat up the costs in AI side

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