Google parent Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is starting 2024 off with a raft of pink slips as the Cloud Czar looks to focus on artificial intelligence (AI).
Hundreds of people working on its voice interface, the Google Assistant, are among those seeking new jobs. Hardware divisions like the Pixel Phone and FitBit also lost employees.
Google had over 182,000 employees at the end of September, so the cuts aren’t huge in the scheme of things. Alphabet stock is up about 1% over the last 24 hours, with GOOG opening at $144.57 and GOOGL at $143.34 this morning.
You, You, You, Not You
The layoffs are part of an industry trend. Big tech companies are clearing out older technologies, hoping to automate programming with generative AI.
For Google, this means trimming things like Fitbit, the smartwatch it acquired in 2021 for $2.1 billion. Co-founders James Park and Eric Friedman were among those let go. Layoffs also hit Nest, which Google bought for $3.2 billion 10 years ago. The hope is that, by putting all its hardware under a single functional team, Google can achieve some of the synergies Apple (NASDAQ:AAPL) has.
But hundreds of people are also being let go by the core engineering division. The argument here is that search is being automated and that the company needs to build more skills for the AI era.
Users will see the results in lost features, including entire products like the Google Podcast app, which goes away in April.
Analysts remain enthusiastic about the stock, however. They argue that the company’s dominance in search and its Google AdSense business gives it a huge moat of self-sustaining profit. Rearranging the deck chairs against the rising tide of AI just makes sense.
Google Layoffs: What Happens Next?
The savings are going to disappear quickly as Google and its competitors bid for rare AI talent. The action will have little impact on the bottom line in the near term.
As of this writing, Dana Blankenhorn had LONG positions in AAPL and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
