Google Q4 2024 Earnings: CEO Pichai Says DeepSeek Models Less ‘Efficient’ Than Gemini’s

'The cost of actually using it is going to keep coming down, which will make more use cases feasible,' Alphabet CEO Sundar Pichai says.

Sundar Pichai, CEO of Google Cloud parent Alphabet, took shots at the artificial intelligence models made by DeepSeek that have rocked the technology and investor world, saying that the China-based AI lab’s models are less efficient compared to his offers.

Although DeepSeek’s apparent advancement in making a competitive AI model at a fraction of the cost sent AI chipmaker Nvidia’s market capitalization down about $600 billion in the largest drop in U.S. stock market history, Pichai told listeners on his company’s latest quarterly earnings call Tuesday that Google’s Gemini 2.0 Flash models are “some of the most efficient models out there, including compared to DeepSeek’s V3 and R1.”

Google Cloud parent Alphabet reported results for the three months ended Dec. 31.

[RELATED: Google Workspace Partners Expect Big Margin Hit, Blindsided By Gemini AI Price Action]

Google Q4 Earnings

Still, like other tech vendor CEOs reporting earnings since DeepSeek captured headlines–including those of AI rivals IBM and Microsoft–Pichai praised the creators as a “tremendous team” that did “very, very good work” and said that falling AI costs is ultimately a plus for the market.

“The cost of actually using it is going to keep coming down, which will make more use cases feasible,” Pichai said. “That’s the opportunity space. It's as big as it comes. And that's why you're seeing us invest to meet that moment.”

According to CRN’s 2025 Channel Chiefs, Google said that it is working to enable partners to develop an AI strategy and sell AI solutions, improve partner technical skills and increase the amount of professional services going through partners.

Google’s “obsession with cost per query” and full-stack development approach–including Google’s Tensor Processing Unit (TPU) custom-designed AI accelerators–sets the vendor up well as an AI and cloud leader, Pichai said.

Pichai said to look forward to more agentic AI experiences coming this year, with agentic AI expanding the AI “opportunity space.”

“It feels very far from a zero sum game,” Pichai said. “There’s plenty of room, I think, for many new types of use cases to flourish.”

When asked about Google’s Gemini monetization strategy looking ahead, Pichai said “for now, we are focused on a free tier and subscriptions.”

“As you've seen in Google over time, we always want to lead with user experience,” he said. “We do have very good ideas for native ad concepts, but you will see us lead with the user experience. But I do think we're always committed to making the products work and reach billions of users at scale.”

Google’s AI Supply, Demand

Pichai highlighted growth plans for Google’s infrastructure, including plans for seven new subsea cable projects and Google data centers delivering “nearly four times more computing power per unit of electricity compared to just five years ago.”

“Cloud customers consume more than eight times the compute capacity for training and inferencing compared to 18 months ago,” Pichai said.

Google Cloud revenues hit $12 billion for the quarter, up 30 percent year over year but marking a declaration from the prior quarter’s 35 percent growth.

Alphabet CFO Anat Ashkenazi said the growth was still “impressive” and the fourth quarter of 2023 proved a strong comparable plus the vendor saw more demand than capacity.

“We are in a tight supply-demand situation, working very hard to bring more capacity online,” she said.

Ashkenazi said on the call that the company expects to spend $75 billion over 2025 in capital expenditures, most of that going “toward our technical infrastructure, which includes servers and data centers.”

The company’s fourth quarter CapEx was $14 billion, “primarily reflecting investments in our technical infrastructure, with the largest component being investment in servers, followed by data centers to support the growth of our business across Google Services, Google Cloud and Google DeepMind.”

She said to expect activities such as AI writing code, bringing together AI research teams and looking at the company’s real estate footprint to help moderate spending. But Alphabet expects “some headcount growth in 2025 in key investment areas such as AI and cloud.”

Alphabet ended 2024 with about 183,000 employees, about the same as the end of 2023.

Google Cloud Q4 In Depth

Pichai said that more than 4.4 million developers are using Gemini models today, double the number from six months ago. Cloud saw the number of first-time commitments more than double compared to 2023.

Cloud saw “several” deals worth more than $1 billion close. The number of deals worth more than $250 million doubled from the prior year. The operating income for Google Cloud was $2.1 billion, more than double year over year.

Ashkenazi credited “healthy Google Workspace growth,” an area solution providers participate in, with an “increase in average revenue per seat.”

Vertex AI, Google’s AI developer platform, saw a fivefold increase in customers year over year, Pichai said. Vertex usage increased twentyfold during 2024. Pichai identified “particularly strong developer adoption of Gemini Flash, Gemini 2.0, Imagen 3 three and, most recently, Veo,” Google’s video creator model.

“We are making dramatic progress across compute, model capabilities and in driving efficiencies,” Pichai said. “We are rapidly shipping product improvements and seeing terrific momentum with consumer and developer usage. And we're pushing the next frontiers from AI agents, reasoning and Deep Research, to state-of-the-art video, quantum computing and more.”