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Yahoo
an hour ago
- Yahoo
Alphabet Has a Brilliant Fallback Plan on AI Even if Search Is Disrupted
Key Points In its second-quarter earnings release, Alphabet raised its 2025 capital spending guidance by $10 billion. The spending is to serve demand from AI cloud customers. Google Cloud has become a go-to choice for most AI startups. 10 stocks we like better than Alphabet › Google Search parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is the cheapest stock in the Magnificent Seven, and you might scratch your head about why when looking at its financials. Last quarter, revenue grew 14%, with earnings per share up 22%. Yet the stock trades at 19.5 times this year's earnings estimates, a lower-than-market multiple. The reason is that investors fear what the advent of artificial intelligence (AI) will do to Google Search activity, and whether Alphabet's biggest cash cow will come under threat. Last quarter's numbers show that isn't happening, fortunately. But it doesn't necessarily mean disruption will never happen. Yet even if Search growth peters out, it seems Alphabet has another AI fallback plan: Google Cloud. Google Cloud is seeing massive AI-powered growth Even if Search gets disrupted to some degree -- though I don't believe that will happen quickly -- it appears Alphabet's Google Cloud unit could make up the then some. Last quarter, Google Cloud grew revenue 32% to $13.6 billion, accelerating from the prior quarter's 28% growth, while operating margins widened tremendously, nearly doubling from 11.3% to 20.7% over the course of the year. It should also be noted that of the $3.3 billion in incremental revenue relative to last year, $1.65 billion fell to operating profits, so Google Cloud is making operating margins above 50% on every incremental dollar of cloud revenue. Google Cloud's backlog also surged 18% sequentially -- good for a 72% annualized rate -- and 38% year over year to $106 billion. That's higher than the current revenue growth rate, suggesting the unit could continue to accelerate, or at least keep up its current high growth rates for a while. There is such hot demand for Google's cloud infrastructure and such high returns on its assets that management decided to increase its capital expenditure plan for 2025 from $75 billion to $85 billion. And why not? The company is clearly seeing huge demand for Cloud services, and very profitable demand at that. If a business is earning such high returns on incremental investments, it should invest all that it can. Google Cloud is becoming a platform of choice for AI start-ups While Alphabet doesn't break down cloud growth by cohort, it's likely that a big reason for the strong Cloud growth is demand from premier AI unicorns. On the second-quarter conference call with analysts, CEO Sundar Pichai said: "We also offer the industry's widest range of TPUs [tensor processing units] and GPUs [graphics processing units], along with storage and software built on top. That's why nearly all gen-AI unicorns use Google Cloud." Indeed, Google Cloud's AI unicorn customer list is impressive, encompassing the cream of the crop in AI talent today: Safe Superintelligence (co-founded by Ilya Sutskever, an OpenAI co-founder and former Google Brain researcher) Physical Intelligence (founded by a cohort that includes former Google DeepMind researchers) Anthropic Thinking Machines Lab (founded by Mira Murati, former chief technology officer of OpenAI) World Labs (founded by Fei-Fei Li, a Stanford professor known as "the godmother of AI") OpenAI, per a recent Google Cloud deal announced in June. This isn't a comprehensive list, and Google also has big enterprise customers, including Apple. It's also encouraging that two of the biggest AI model builders, OpenAI and Anthropic, still choose to run workloads on Google Cloud despite their primary relationships being with other cloud providers and major investors Microsoft and Amazon, respectively. Why has Google become such a destination for AI start-ups? While that discussion would be long and highly technical, the attraction appears to be based on a combination of factors. First, Google was the first cloud company to begin designing its own AI chips, or "tensor processing units," back in 2014, in order to power its artificial intelligence research experiments more cost-effectively. On that subject, Google is the tech giant that has been studying AI seriously for the longest time. Although OpenAI was the first to unveil ChatGPT and assumed the lead in AI chatbots, before that, Google had been the monopolistic center of AI research. Google researchers invented "transformers" technology, the main innovation that catapulted AI technology to the next level over the past eight years or so. It appears that Google's legacy position at the forefront of AI research -- even though it was initially caught off-guard by ChatGPT in late 2022 -- has informed its knowledge of AI infrastructure, paving the way for Google Cloud's recent success. Google Cloud can pick up the slack Over the course of a year, Google Cloud's operating profit rose 141%, going from 4.3% of total operating income to 9.1%. Given that Google is accelerating investments and appears to have an accelerating cloud backlog, look for that percentage of profits to increase quickly. Over time, if Search growth slows or even declines, Google's own AI service based on its Gemini large language model (LLM) could pick up the slack. But even if that doesn't happen, it appears there's a good chance that the next big AI breakout could be one of Google Cloud's AI unicorn customers. That would lead to growth in Google Cloud profits, offsetting a slowing or decline in Search. And if Alphabet is able to ward off the threat to Search, the stock will look like one of the biggest bargains on Wall Street, with its cloud business playing a huge part. Should you invest $1,000 in Alphabet right now? Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* Now, it's worth noting Stock Advisor's total average return is 1,019% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Billy Duberstein has positions in Alphabet, Amazon, Apple, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Alphabet Has a Brilliant Fallback Plan on AI Even if Search Is Disrupted was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Tom's Guide
2 hours ago
- Tom's Guide
I tested ChatGPT Study Mode vs NotebookLM — here's which one came out on top
OpenAI is taking on one of Google's most high-profile AI products — NotebookLM — with its new ChatGPT Study Mode, and I say this quietly — it might just be better. They're not the same product, and Study Mode doesn't include the podcasting feature that helped NotebookLM go viral, but it's a great way to tackle a complex problem without the AI just giving you the answer. I'm currently doing a distance learning degree with the U.K.'s remote learning Open University organization, focusing on a range of science and technology topics. Having a tool like NotebookLM allows me to work through the material and ask questions without judgment. ChatGPT Study Mode is that — but with a better LLM and an interface designed for learning, not just sourcing information. Study Mode isn't as radical a shift as NotebookLM. Essentially, it's an adapted version of ChatGPT itself with a focus on learning and interactivity. It's OpenAI directly building into ChatGPT something that startups have been using the underlying LLM to create themselves — including the likes of Duolingo. Even Claude has a Study option that lets you create Artifacts around a particular topic. This isn't a new idea, but OpenAI's implementation is surprisingly effective. Technically, you could create a version of 'Study Mode' yourself using a project, your own data files, and custom instructions — that's essentially how it was built. The custom instructions behind Study Mode are designed to encourage participation, self-reflection, and provide actionable feedback. It basically becomes a tutor. Comparing the two is a challenge as they work very differently but serve a similar purpose. NotebookLM lets you upload your own data and then work across it. For example, you could upload a PDF of the course textbook plus YouTube video tutorials, and use it like a chatbot trained specifically on that data. Get instant access to breaking news, the hottest reviews, great deals and helpful tips. Both systems were built with academia in mind — Study Mode for college students trying to get to grips with new material, NotebookLM more for advanced learners or specialists exploring a subject in depth. Study Mode in ChatGPT is more of a framework of responses tailored to learning new material. You can still ground it in your own documents by adding them to the chat, but its superpower is the custom instructions that guide it to ask academic-level questions and tailor responses to your skills and topic. Both systems were built with academia in mind — Study Mode for college students trying to get to grips with new material, NotebookLM more for advanced learners or specialists exploring a subject in depth. When it comes to specific features, the differences become more apparent. Study Mode offers real-time feedback loops, adjustable difficulty levels, and Socratic questioning that adapts based on your responses. It can create mind maps, flashcards, and even suggest related topics to explore. NotebookLM, meanwhile, excels at cross-referencing multiple sources, creating comprehensive summaries, and its standout audio feature that turns any document into a podcast-style discussion. NotebookLM also offers better citation tracking, crucial for academic work where source attribution matters. I gave each of them my notes from a recent Open University module that allows the use of AI for learning new topics (just not in writing). I was exploring the concept of sustainability in product design. While NotebookLM was able to give me very specific responses to questions I had about a particular aspect — something I was working on for a final essay — its responses were just that: a block of text. Even when I asked it to turn the content into a quiz, it gave me something printable, rather than something interactive. Giving ChatGPT Study Mode the same notes, it asked about my experience and skill level and then built a personal tutor for me. This included tailoring the response to my experience and creating a genuinely interactive quiz. My only issue with ChatGPT is that the output isn't exclusively based on the contents of the study notes. So if you're writing something that requires strict adherence to course material, you risk introducing uncited information. NotebookLM, by contrast, is fully grounded in the data you upload. Much like you wouldn't try to do everything in Excel — although I know some people who would if they could — you shouldn't expect either ChatGPT or NotebookLM to do it all. There's plenty of room for both tools in a student toolkit. There's plenty of room for both tools in a student toolkit. For example, you could use NotebookLM to create an audio overview and listen to a discussion of the class material as if you were in a lesson with two teachers explaining it conversationally. You can also have it extract reports on key moments or elements within the class data. This is invaluable if you're working on a tricky essay point or need to expand to hit a word count. Then you could feed that NotebookLM-generated report into a new ChatGPT Study Mode session and have the OpenAI platform turn it into an interactive quiz or guide you through answering questions. A quote from a student shared by OpenAI sums up the value of Study Mode: "The best way I'd describe it is a live, 24/7, all-knowing 'office hours.'" Both tools have their strengths. NotebookLM feels like a modern take on an interactive textbook — great for digging into course materials and pulling out exactly what you need. Study Mode is more like having a patient tutor who's available whenever you are. If you're trying to actually understand something rather than just get through it, Study Mode stands out. Used together, they cover a lot of ground and can genuinely change how you approach learning. The future of AI-powered learning tools looks promising, with both platforms likely to evolve rapidly. OpenAI has hinted at adding collaborative features to Study Mode, potentially allowing students to share sessions or work together on problems. NotebookLM might expand its audio capabilities to include different presentation styles beyond the current podcast format. For students deciding between them, consider your learning style: if you're an auditory learner who benefits from discussion, NotebookLM's podcast feature is invaluable. If you prefer interactive problem-solving and guided learning, Study Mode's tutoring approach will serve you better. The ideal scenario? Use both — they're complementary tools that, together, create a comprehensive learning ecosystem.
Tom's Guide
4 hours ago
- Tom's Guide
7 major AI updates this week — including one that could change search forever
AI moves fast and this past week, it felt like it hit the gas. Between major upgrades from Google and Microsoft, new tools from OpenAI, and a buzzy Amazon-backed launch, there's been no shortage of AI news and breakthrough features. Whether you're trying to learn faster, protect your privacy or star in your own TV show, here are the biggest AI headlines you might've missed and what these latest updates mean for you. Gemini's new mode called Deep Think is exactly what it sounds like. Instead of rushing to deliver an answer, Deep Think gives Gemini more 'thinking time,' letting it run a parallel process to brainstorm, refine and settle on a better response. The result is smarter, more reasoned answers that feel surprisingly human. If you're looking to try it, you'll have to sign up as an Ultra subscriber. However, based on past rollouts, don't be surprised if Google eventually makes it free. Google's AI Overviews now let you upload entire files like PDFs or images and ask questions about them directly. It's a time saver when you need to summarize a large document or, if you need to scan that document, you can do that, too. Just upload it in the chat and Google will take care of the rest. Get instant access to breaking news, the hottest reviews, great deals and helpful tips. Combined with the new follow-up feature, Google is turning search into something closer to a true AI assistant (and more than just a results page). Another big update from Google. NotebookLM can now generate Video Overviews, narrated, slide-style summaries of your documents complete with quotes, diagrams and data pulled directly from your files. You can also create multiple versions of audio, video or visual outputs in the same notebook and mix formats (like listening to a summary while viewing a mind map). It's a big step toward making research more interactive. This week, users discovered that shared ChatGPT chats were surfacing in Google search results, even ones with sensitive or private information. OpenAI quickly disabled the "Make public" toggle that enabled sharing, and it's now working with search engines to de-index exposed chats. If you've ever shared a conversation link, it might be worth double-checking your settings and deleting anything you don't want out in the wild (aka the internet). Your Edge browser is now a full-blown AI assistant. Microsoft rolled out Copilot Mode, a smart sidebar that adapts to whatever you're doing online. For example, if you're reading an article, Copilot Mode can take over and summarize it. If you're writing an email, the AI will suggest improvements. And if you're shopping online, it can compare products in real time. It's one of the most proactive AI upgrades we've seen from Microsoft yet. Need help studying? ChatGPT's new Study Mode turns the chatbot into a personalized tutor. Students of all levels and skill levels can take advantage of this AI-powered opportunity to learn more efficiently. All you do is choose your subject, set your level and decide how you want to learn; via flashcards, concept breakdowns, practice problems or Q&A. Whether you're prepping for a test or just brushing up, this free feature is worth a try. A new capability inside ChatGPT is Agent mode. Unlike a typical chatbot, the Agent can actually do things for you like browse the web, organize files or run multi-step tasks such as creating and emailing a report. When I put Agent Mode to the test, I discovered the AI could juggle real-world assignments with surprising ease, though it still needs some hand-holding. I don't trust it completely yet, but it will be interesting to see how it evolves. A new Amazon-backed startup called Showrunner is making waves by offering what it calls the 'Netflix of AI.' Using just a short prompt, you can generate an entire animated TV episode and even insert yourself into the story. It uses AI to script, voice, and animate everything. As an early member, I have tried the AI tools and was impressed by how easy it is to use. Plus, the opportunity to see what the community of Showrunner users has created helps to spark new ideas. From smarter search and study tools to evolving AI privacy issues, this week proves just how fast the AI landscape is changing. Tech giants like Google, Microsoft and OpenAI continue to push the boundaries of what AI can do while new players like Showrunner hint at where things might be headed next. If you blink, you might miss something big. But don't worry we'll be here every week to break it down. Want to stay ahead? Bookmark our AI hub and check back for hands-on tests, expert tips and the latest news you need to know. AI is constantly evolving and the last few days prove just how quickly things change. Follow Tom's Guide on Google News to get our up-to-date news, how-tos, and reviews in your feeds. Make sure to click the Follow button.
