Alphabet's earnings show tremendous promise for the AI ecosystem (GOOGL, GOOG)

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Google parent company Alphabet reported a solid Q2 2017 on Monday, with $26 billion in revenue, up 20% from the same quarter in 2016.

While primarily ad-revenue driven, the company’s “Other Revenues” segment — which lumps together everything from its Pixel smartphone and hardware products, to its cloud computing and storage offerings, to its YouTube Red and TV streaming services — also exhibited significant growth, generating $3 billion in Q2, up 42% year-over-year (YoY).

The positive performance of Other Revenues highlights AI's growing role in Google’s core products. During the earnings call, Google CEO Sundar Pichai explained that the company’s success can be attributed to its focus on infusing products and platforms with the power of AI, as the company pivots from mobile-first to AI-first. This echoes comments made by Pichai during Google’s I/O developer conference in May earlier this year.

There are three areas of AI that the company is particularly bullish on:

The cloud: Google’s cloud platform remains one of the fastest-growing businesses across Alphabet. The company leverages machine learning (ML) to sort through the massive stores of data and automate virtual computer processes. This allows businesses using the Google Cloud Platform to run complex computations remotely, rather than having to transfer data to a local server.
Voice assistants: Voice is quickly gaining traction as a platform-agnostic way for consumers to navigate all of their connected devices. This means that the same assistant can receive and offer contextual information to users, whether they’re using a smartphone, smart speaker, or connected car. Google is pushing this idea of “ambient computing” with its Google Assistant, which is already available on more than 100 million devices, including the Google Home and Pixel smartphones. Google’s release of Assistant SDK also enables others to build Google Assistant’s capabilities into devices using their own hardware, which could further expand the Assistant's ecosystem.
Visual search: Google Lens, which is expected to be available in Q4, uses computer vision to examine photos viewed through the smartphone camera, or saved photos, and then provides information and completes tasks based on those images. The AI-driven visual search app will allow users to more naturally interact with visual and audio cues on their phone and brings Google’s use of AI into the physical environment. Google Lens is also integrated into one of the company's most-used apps, Photos, giving Google a secure place on users’ phones regardless of the success of its own hardware.

Google continues to spearhead the transformation toward AI-driven computing. By focusing on AI and its related applications, Google is laying the foundation for what will play an integral role in the future of computing processes. Doubling down early positions the tech giant at the forefront of this transformation.

Jessica Smith, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the voice assistant landscape that:

Identifies the major changes in technology and user behavior that have created the voice assistant market that exists today.
Presents the major players in today's market and discusses their major weaknesses and strengths.
Explores the impact this nascent market poses to other key digital industries.
Identifies the major hurdles that need to be overcome before intelligent voice assistants will see mass adoption.

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