Amidst Waves of Lay-offs Google's Stock Price Reaching a New High

Despite recent controversies surrounding rounds of layoffs and the withdrawal of senior scientists, Google remains sought after in the stock market. The stock price of its parent company Alphabet (Google A, GOOGL) rose 1.9% to $149.85, surpassing the record high of $149.839 in revenue on November 18, 2021.

In recent days, it was reported that two senior scientists, Laurent Sifre and Karl Tuyls, from DeepMind, a subsidiary of Alphabet, have left the company and are currently in Paris, France, discussing with investors about the establishment of an artificial intelligence startup and the $217 million financing. This is not the first time that DeepMind researchers have left Alphabet to raise a large amount of funds.

Founded in 2010, DeepMind was later acquired by Google in 2014. The company has made many gains in arenas such as generative AI, and boasted many technical elites in relevant fields. In 2016, DeepMind achieved significant progress in the field of AI, with AlphaGo beating top human professional Go players, thus garnering immensive international attention. The two scientists who recently left had worked at DeepMind for many years and made significant contributions to the company's research and development.

Aside from the resignation of senior scientists, employees in many departments of Google are also caught up in the vortex of dismissal. Starting from January 2023, Google has carried out multiple rounds of large-scale layoffs, with a total of 12000 employees, accounting for approximately 6% of full-time employees. In addition, Google has also reduced expenses on employee benefits and office equipment. In 2024, the layoff is still going on. On January 11th, multiple foreign media reported that Google intended to lay off approximately 1,000 employees in its hardware, voice assistant, and core engineering teams. The company subsequently confirmed that the aforementioned teams have all dismissed hundreds of employees. Later, it was reported that Google had reduced its advertising and marketing team as well, sacking hundreds of related employees.

In just two weeks since the start of 2024, Google's layoffs have repeatedly dominated the media headlines. Even so, it is far from over. A few days ago, Google CEO Sundar Pichai warned all employees of further team reduction in an internal memo, “We have ambitious goals and will be investing in our big priorities this year”. “The reality is that to create the capacity for this investment, we have to make tough choices …. ” he added. Although Pichai did not specify what the so-called major priorities really mean, the development of artificial intelligence definitely has a place.

The departure of senior scientists, coupled with layoffs since the beginning of the year, has raised public concerns about Google's innovation competitiveness. Nevertheless, the stock price of its parent company, Alphabet, has maintained an upward momentum thanks to the progress in AI. In December 23, Google officially launched Gemini 1.0, marking its formal entry into the artificial intelligence big model market. It is reported that the model has three versions, Nano, Pro, and Ultra, for different tasks, with the Ultra version demonstrating advanced performance in multiple experiments. The launch of this model has once again sparked an AI frenzy led by tech giants in the US stock market.

Stimulated by positive factors such as AI, the US technology stock market rebounded in 2023. This new technological revolution has benefited many people, but meanwhile exposed the disadvantages of certain companies. To reduce costs, increase efficiency, and quickly enter the AI market, betting on big models on the one hand while laying off employees on the other appears to be the strategy adopted by many tech companies like Google. Finding ways to reduce costs in unprofitable businesses means that those companies will direct resources towards the R&D of AI tools and drive more products into the market. The implied future returns might be the reason why investors maintain a positive attitude.