Google’s newly appointed CFO Anat Ashkenazi made her debut on the company’s Q3 2024 earnings call with a clear message: there’s more room for efficiency improvements at Alphabet. Ashkenazi identified driving further efficiencies across the organization as one of her “key priorities,” signaling potential changes ahead for the tech giant.
While acknowledging the “really good work” done by CEO Sundar Pichai and former CFO Ruth Porat in restructuring Google’s cost base, Ashkenazi emphasized that “any organization can always push a little further.” Her comments came in response to Evercore analyst Mark Mahaney’s question about opportunities to improve Google’s profit margins.
The AI investment factor looms large over these efficiency discussions. Despite reporting impressive Q3 numbers, Google has been transparent about its substantial spending on data centers required to power its new AI models and products. This heavy capital expenditure has investors and analysts watching closely to ensure the company maintains healthy margins while pursuing AI leadership.
Crucially, Ashkenazi suggested that future efficiencies may come from AI-powered tools rather than traditional headcount reductions. She pointed to internal AI adoption as a key opportunity, noting the importance of “how we operate and how we run the business” beyond just organizational size. This strategy aligns with Pichai’s revelation that a quarter of all new code written inside Google is now generated by AI—a striking indicator of how deeply AI has penetrated the company’s operations.
Ashkenazi’s arrival has generated significant excitement among analysts and investors. BNP Paribas analysts described her appointment as a “code red” initiative and “one of the most underappreciated catalysts in the sector right now,” anticipating greater financial transparency, particularly regarding AI spending.
The context of these efficiency efforts traces back to September 2022, when Pichai announced his goal to make Google 20% more efficient. Since then, the company has implemented layoffs, reduced meetings, and deployed AI coding tools. Most recently, Google announced it would consolidate its Gemini chatbot team into the Google DeepMind unit, continuing its organizational restructuring.
Investors are particularly interested in whether Google’s AI product overhauls—including its core Search product—are delivering returns and whether the company can maintain competitive velocity against rivals like OpenAI.
Key Quotes
But I think any organization can always push a little further
New CFO Anat Ashkenazi made this statement on the Q3 earnings call, signaling her intention to drive additional efficiency improvements beyond what previous leadership achieved, despite acknowledging their good work in restructuring costs.
Think not just about the size of the organization but mostly how we operate and how we run the business
Ashkenazi emphasized this point when discussing efficiency opportunities, suggesting that AI-powered process improvements and organizational simplification—rather than just layoffs—would be key to future cost optimization.
a quarter of new code written inside Google is generated by AI
CEO Sundar Pichai revealed this striking statistic during the earnings call, demonstrating how deeply AI has already transformed Google’s internal operations and supporting Ashkenazi’s vision of AI-driven efficiency gains.
one of the most underappreciated catalysts in the sector right now
BNP Paribas analysts used this phrase to describe Ashkenazi’s appointment, calling it a ‘code red’ initiative and expressing optimism that she would bring greater financial transparency, particularly around AI investments.
Our Take
Google’s approach reveals a sophisticated understanding that the AI revolution requires both aggressive investment and disciplined execution. The fact that 25% of Google’s code is now AI-generated isn’t just a productivity metric—it’s proof that the company is eating its own dog food and finding real value. This internal validation is crucial as Google asks investors to trust its massive AI infrastructure spending. Ashkenazi’s focus on operational efficiency through AI rather than blunt headcount cuts suggests a more sustainable path forward than the slash-and-burn approach some tech companies have taken. However, the real test will be whether Google can translate these internal efficiencies into competitive advantages against nimbler rivals like OpenAI. The consolidation of Gemini into DeepMind hints at ongoing organizational challenges in coordinating AI efforts across the sprawling company.
Why This Matters
This announcement signals a critical inflection point for Google’s AI strategy and financial management. As the AI arms race intensifies, Google faces the dual challenge of investing heavily in AI infrastructure while maintaining the profit margins that Wall Street expects from a mature tech giant.
The emphasis on AI-driven internal efficiencies rather than just headcount cuts represents a sophisticated approach to cost management that could become a blueprint for other tech companies. With 25% of Google’s code now AI-generated, the company is demonstrating that AI can be both a major cost center and a productivity multiplier.
For the broader AI industry, Google’s financial discipline matters because it affects how much capital flows into AI research and development. If Google can prove that massive AI investments can coexist with improving efficiency metrics, it validates the business case for AI at scale. Conversely, if margins compress too much, it could trigger a broader reassessment of AI spending across the tech sector. The appointment of a CFO specifically focused on efficiency while AI spending accelerates suggests Google is preparing for a long-term AI competition that requires both innovation and financial sustainability.
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Source: https://www.businessinsider.com/google-earnings-q3-2024-new-cfo-boost-efficiency-2024-10