Sundar Pichai: Google CEO says software not dead, names biggest risk to AI’s rally

Sundar Pichai, the Chief Executive of Google-parent Alphabet, rejected the idea that its Gemini Enterprise product for corporations will disrupt the business models of software companies during the tech giant’s earnings call on Thursday morning. For the quarter ending December 31, Alphabet reported its profit jumped 30 per cent to $US34.5 billion ($50b) on sales up 18 per cent to $US113.8 billion, as it boasted that services linked to artificial intelligence are driving huge demand for its products. Gemini Enterprise Mr Pichai said Alphabet has now sold more than 8 million paid seats (user subscriptions) to its AI-powered Gemini Enterprise product that it launched just four months ago, due to huge demand from large corporations. Gemini Enterprise allows companies in any sector or service to build an AI assistant and automate workflows with no coding required. This means it’s simple to put an AI agent to work across teams from marketing to human resources, sales, finance, legal, or technology. “Gemini is becoming the AI engine for the world’s most successful companies,” said Mr Pichai. “We have sold more than 8 million paid seats of Gemini Enterprise to more than 2800 companies, including BNY (Bank of New York) and Virgin Voyages to streamline knowledge management and automate processes.” The sudden arrival of AI agents like Gemini Enterprise that help companies reduce business costs has accelerated a share market rout among software companies considered vulnerable to competition from artificial intelligence. The selling extended to a historic one-day collapse of 9.4 per cent for the S&P/ASX Technology Sector on Wednesday as it heads for seven straight months of losses. On Wall Street, Sydney-founded software company Atlassian has cratered 66 per cent in 12 months as investors worry its software services will not be needed so much by large enterprises in the future. “It seems there’s a market belief that the software companies are kind of losing pricing power,” Evercore analyst Mark Mahaney told Mr Pichai. “You’re at the forefront of AI and the impact that’s having on software companies. Why wouldn’t that be, or why would it be undermining the economics of your large software company base?” In response, Mr Pichai said Google Enterprise would prove to be more of an enabler than a disruptor for the software businesses that investors have rejected for the last six months. “What I see the successful companies doing is they are definitely incorporating Gemini deeply in critical workflows, on improving their product experience and driving growth or using it to drive efficiency within their organisations,” Mr Pichai said. “I think it is an enabling tool, just like it has been an enabling tool for us across our products and services, be it Search, YouTube, etc.” Alphabet’s Gemini App for single or private users is also seeing breakneck growth and taking market share from market pioneer ChatGPT. In total, the company said Gemini App now has 750 million monthly active users, boosted by the November 2025 launch of its Gemini 3 model. CEO names biggest risk to mania for AI services The $US4 trillion tech behemoth is now seeing such strong demand and return on investment from its AI services that it flagged plans to spend between $US175 billion and $US185 billion on the hardware infrastructure needed to offer its products. On the earnings call, Mr Pichai also unambiguously detailed what he sees as the single biggest risk to the advancing pace of AI adoption. “The top question (for Alphabet) is definitely around compute capacity and all the constraints, be it power, land, supply chain constraints,” he said. “How do you ramp up to meet the extraordinary demand for this moment and get our investments right for the long term?” Several mega-cap tech companies, including Alphabet, Amazon and Instagram-parent Meta, have already signed deals to use nuclear energy, given that the supply of power is widely regarded as the biggest bottleneck to the pace of AI’s development. Over the December quarter, the ferocious demand for computing power and data processing even pushed revenues 48 per cent higher for Google’s Cloud business to $US17 billion. The company said demand was even stronger - it just does not have the current infrastructure to meet it. Waymo and YouTube Elsewhere, the sprawling tech giant’s self-driving taxi business named Waymo grew to making 400,000 paid rides a week in the US and has now done more than 20 million autonomous trips. Mr Pichai said it will expand to many more US cities in 2026, with plans to launch the service in London and Tokyo this year. While streaming platform YouTube continues to grow strongly and now has more watched hours than rival Netflix. Mr Pichai added that subscriptions to its YouTube Premium and YouTube Music products are climbing at healthy rates. Investors have cheered Alphabet’s success to send the stock 60 per cent higher over the past year, as worries its core Search business would be killed by AI have retreated into the distance. As of the end of the December quarter, it said it had $US126 billion in cash in hand or equivalent securities.