Google parent Alphabet (GOOGL) -) shares jumped in early Wednesday trading after a report suggested the tech giant was preparing a major shakeup of the world's biggest advertising platform, a move linked to growth in AI-generated sales.
The Information reported that Google, which operates both the eponymous search engine as well as the video-sharing website YouTube, is increasing its reliance on AI-generated ads that can be sold to customers worldwide.
The sales, which are largely automated, generate tens of billions in sales at a much wider margin than traditional ad-related revenue overseen by human employees.
As a result, The Information reported, Google in coming months is looking to reorganize its 30,000-strong ad-sales team, with possible staff cuts pending.
Google's YouTube ad sales surged
Google reported a record $59.65 billion in overall ad revenue for the three months ended in September. The figure was led by YouTube sales, which rose 12.4% to $7.95 billion. Search and other revenue rose 11% to $44.03 billion.
Looking into 2024, analyst see the looming presidential elections, alongside the Summer Olympics in Paris and the UEFA Euro 2024 soccer tournament, as boosting global ad sales. Developing AI technologies are expected to drive further gains for both Google and Facebook owner Meta Platforms (META) -).
"Given Meta and Google’s scale, we believe AI benefits are accruing 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 businesses have clear advantages from AI improving user and advertiser products, and with technology maturing, we expect to see this translate to sustained revenue growth in 2024."
Google shares were marked 3.15% higher in early Wednesday trading to change hands at $140.82 each, , the highest in more than two months.
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