Google Earnings Reiterate 'Out Of This World' Ambitions

AI-First Mantra

Munster noted Google CEO Sundar Pichai emphasized on the earnings call his "AI-first" mantra. The analyst noted increased machine learning investment was highlighted in at least two segments of Google's ad model, namely smart bidding and universal app campaigns.

Loup Ventures explained that smart bidding helps machines predict in real time how an ad should perform in front of a particular target and adjusts advertiser bids to maximize ROI. In universal app campaigns, machine learning is being used to best promote developer apps across Google properties including Search, YouTube and the Display Network, the firm added.

Alt. Realities

Munster noted management also made a couple of callouts on VR. "Google's VR platform Daydream is seeing more than half its usage consuming video, with YouTube VR being its #1 app by time spent," the analyst said.

Giving an anecdote, Munster said, "At a recent event, we heard from Google that people are using the Daydream headset to 'hold the phone' for them as they watch video laying down."

"While not an exciting VR use case, we heard that users are spending multiple hours in VR this way, so it is getting users comfortable with the experience."

The analyst thinks VR investment near term still appears focused on mainstream products like Daydream and accompanied VR produced content such as YouTube VR, Google Earth VR and Tilt Brush.

Although Google made no mention on the call, the analyst believes Google is also experimenting with advanced VR and AR hardware.

Accordingly, Munster said he continues to believe Google is the best-positioned player to provide the AR operating system of the future, and the company's leadership position in machine learning and AI only reinforces that view.

At the time of writing, Google shares were up 4.55 percent at $932.04.

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