Salesforce (CRM) vs. Alphabet (GOOGL): AI's Role in Tech Layoffs Unveiled

Since the launch of ChatGPT in November 2022, GenAI has been reshaping the future of work. From automating routine tasks to transforming entire job roles, generative AI is making a significant impact across multiple industries. A rapid acceleration of task automation could assist organizations in driving labor cost savings and boosting productivity.

If generative AI delivers on its promised capabilities, the labor market could face considerable disruption. Using data on occupational tasks in the U.S. and Europe, Godman Sachs Global Investment Research finds that about two-thirds of today’s jobs are exposed to some degree of AI automation. And this technology could substitute up to one-fourth of current work.

Goldman Sachs estimates that GenAI will eventually automate nearly 300 million of today’s full-time jobs globally.

AI’s Role in Latest Tech Layoffs

With just a month into the new year, tech layoffs are starting to pile up; however, analysts consider this a new normal for Silicon Valley in a considerable pivot to AI. The job cuts are not on the same scale as in late 2022 and early 2023 when tech companies got rid of thousands of employees, a blowback from the frenzied hiring that took place during the pandemic when everyday life turned digital.

According to, a California-based website that tracks the tech sector, the industry lost around 160,000 jobs last year. So far this year, tech layoffs are at nearly 24,584, the site showed, from 93 companies. estimates that approximately 20% of job cuts are brought on by AI and restructuring associated with it. Moreover, Silicon Valley jobs are on the front line, with some coding tasks primarily carried out by generative AI.

Cloud-based software provider Salesforce, Inc. (CRM) announced that it will be laying off about 700 employees, roughly 1% of its global workforce, adding to a brutal string of tech layoffs at the start of 2024. This move comes amid ongoing cost-cutting pressures from investors, including activist shareholders like Elliott Management, to boost its profit margins.

A year ago, CRM lowered its headcount by 10% as a part of its rebalancing efforts after a pandemic-era hiring boom.

Despite the recent cuts, Salesforce is still reportedly hiring for 1,000 open roles across the company, indicating that these layoffs could be a part of an adjustment in its workforce. The company’s focus is directing spending toward growth.

An unnamed source cited in the Wall Street Journal report that the latest round of layoffs could be more of a routine adjustment to the company’s headcount rather than a reactive measure to ongoing economic challenges.

Earlier this month, another tech company, Alphabet Inc. (GOOGL), laid off hundreds of employees across the company as it continues to push for efficiency and focus on its biggest product priorities and significant opportunities ahead.

According to the company, the job cuts will impact employees within Google’s hardware, voice assistance, and central engineering teams. Also, other parts of the tech company were affected.

This layoff announcement marks the latest cost-cutting effort at Google as it continues to work to rein in the drastic headcount growth that took place during the pandemic. In January last year, Google cut its workforce by 12,000 employees or nearly 6% of its employee count. Later in the year, the company made other cuts to its recruiting and news divisions.

Moreover, Google shifted its focus to prioritize developments in AI, launching products such as chatbot Bard and the large language model (LLM) Gemini as it aims to keep up with rivals, including Microsoft Corporation (MSFT) and, Inc. (AMZN).

This season’s tech layoffs are being framed more as restructuring rather than cutting down from prior over-hiring efforts; suggesting that even if employees lose their jobs, there could be some security within the industry more broadly. So, investors shouldn’t worry much about the recent job cuts.

Shares of CRM have gained nearly 27% over the past six months and more than 74% over the past year. Meanwhile, GOOGL’s stock has surged more than 14% over the past six months and approximately 55% over the past year.

Now, let’s review the fundamentals of CRM and GOOGL in detail:

Latest Developments

On January 14, 2024, CRM, at NRF 2024, announced new data and AI-powered tools for retail to help businesses drive efficiency and deliver connected shopping experiences. The Einstein 1 Platform will power these new retail innovations.

With generative AI built into Commerce Cloud and Marketing Cloud, retail merchandisers and marketers can tap into these generative tools with a real-time understanding of customer behavior and preferences to optimize every customer interaction — enhancing loyalty, boosting revenue, and driving employee productivity.

Also, on December 14, 2023, Salesforce unveiled major updates to its Einstein 1 Platform, adding the Data Cloud Vector Database and Einstein Copilot Search. Data Cloud Vector Database will unify all business data, including unstructured data like PDFs, emails, and transcripts, with CRM data to allow the grounding of AI prompts and Einstein Copilot.

Einstein Copilot Search will offer AI search capabilities to deliver accurate answers from Data Cloud instantly in a conversational AI experience, thereby driving productivity for all business users.

For GOOGL, 2023 was a remarkable year of significant advances in AI and computing. On December 6, Google launched its largest and ‘most capable’ AI model, Gemini, which will be in three different sizes: Ultra, Pro, and Nano.

Enterprises could use Gemini for advanced customer service engagement through chatbots and product recommendations and identifying trends for companies looking to advertise their products. Also, it could be used for content creation.

In November, Google further announced a new DeepMind model, Lyria, in partnership with YouTube. Lyria is an advanced AI music generative model that will create vocals, lyrics, and background tracks mimicking the style of famous artists. This model is available on YouTube through two distinct AI experiments – DreamTrack for Shorts and Music AI tools.

Last Reported Quarterly Results

CRM’s total revenues increased 11.3% year-over-year to $8.72 billion for the fiscal third quarter that ended on October 31, 2023. Its gross profit was $6.57 billion, up 14.2% from the year-ago value. Its income from operations rose 226.3% from the prior year’s quarter to $1.50 billion. The company’s free cash flow came in at $1.37 billion, an increase of 1,088% year-over-year.

In addition, Salesforce’s non-GAAP net income grew 47.9% from the previous year’s period to $2.09 billion. Its non-GAAP EPS came in at $2.11, surpassing the consensus estimate of $2.06 and up 50.7% year-over-year.

For the third quarter that ended September 30, 2023, GOOGL reported revenue of $76.69 billion, compared to analysts’ estimate of $75.73 billion and up 11% year-over-year. Its income from operations grew 24.6% from the prior year’s quarter to $21.34 billion. Its income before income taxes rose 30.6% year-over-year to $21.20 billion.

Google parent Alphabet’s net income increased 41.5% year-over-year to $19.69 billion. It posted net income per share of $1.55, compared to the consensus estimate of $1.45, and an increase of 46.2% year-over-year. Further, as of September 30, 2023, the company’s cash and cash equivalents stood at $30.70 billion, compared to $21.88 billion as of December 31, 2022.

Past And Expected Financial Performance

Over the past three years, CRM’s revenue has increased at a CAGR of 18.7%, and its EBITDA has grown at a 43.4% CAGR. The company’s normalized net income has increased at a CAGR of 188.3% over the same time frame, and its levered free cash flow and total assets have improved at CAGRs of 24.8% and 15.5%, respectively.

Analysts expect CRM’s revenue for the current year (ending January 2024) to increase 11% and 56.5% year-over-year to $34.79 billion and $8.20, respectively. For the fiscal year ending January 2025, the company’s revenue and EPS are expected to grow 10.9% and 16.5% year-over-year to $38.57 million and $9.55, respectively.

GOOGL’s revenue and EBITDA have grown at CAGRs of 20.1% and 26% over the past three years, respectively. Its net income and EPS have improved at respective CAGRs of 23.2% and 26.3% over the same timeframe. Also, the company’s levered free cash flow has increased at a CAGR of 36% over the same period.

For the fiscal year ending December 2024, GOOGL’s revenue and EPS are estimated to increase 10.8% and 15.4% year-over-year to $340.50 billion and $6.69, respectively. Likewise, Street expects the company’s revenue and EPS for the fiscal year 2025 to grow 10.5% and 15.6% from the prior year to $376.34 billion and $7.73, respectively. 


In terms of the trailing-12-month EBIT margin, CRM’s 15.87% is 243.7% higher than the industry average of 4.62%. Its trailing-12-month gross profit margin of 74.99% is 54.8% higher than the 48.43% industry average. Moreover, the stock’s trailing-12-month net income margin of 7.63% is significantly higher than the 2.04% industry average.

GOOGL’s trailing-12-month gross profit margin of 56.12% is 15% higher than the 48.81% industry average. Its trailing-12-month EBIT margin of 27.42% is 226.8% higher than the 18.39% industry average. Likewise, the stock’s trailing-12-month net income margin of 22.46% is 541.4% higher than the industry average of 3.50%.

Bottom Line

The tech industry remains focused on trimming costs via job cuts. More than 20,000 tech employees have been laid off so far in 2024. CRM is the latest tech company to announce about 700 layoffs. However, the company still has plenty of job openings, roughly 1000, suggesting that these cuts might not be a drastic strategy shift but a routine labor force adjustment.

Similarly, tech giant Google signaled layoffs this month. Google CEO Sundar Pichai warned employees of more job cuts this year as the company continues to shift investments toward areas like AI. In a memo titled “2024 priorities and the year ahead,” Pichai stated that the company has ambitious goals and will be investing in its big priorities in 2024.

“The reality is that to create the capacity for this investment, we have to make tough choices,” Pichai said. For some teams, that means eliminating roles, which includes “removing layers to simplify execution and drive velocity,” he added.

Many fear that these job cuts could be related to Google’s rollout of AI across its advertisement department, effectively witnessing the technology replace humans. Also, given Salesforce’s heavy investments in AI, people can’t help but wonder if the technology could be threatening its workforce.

In today’s digital era, AI undoubtedly stands out as one of the most influential forces shaping the future of work. AI technology is making its dramatic impact felt, especially across the tech industry, from automating business operations to transforming entire job roles.

While some tasks/jobs are being automated, replacing humans, new roles are emerging with AI integration. Tech companies’ increased focus on AI is leading to a hiring surge in this area while other sectors face layoffs.

This season’s job cuts in the tech industry are viewed more as restructuring efforts rather than navigating economic challenges or cutting down from previous over-hiring during the pandemic. So, the latest tech layoffs should be the least of investors’ worries, and they can continue to hold CRM and GOOGL shares. 

Will Google's UPI Expansion Make GOOGL a Must-Have Tech Stock?

Alphabet Inc. (GOOGL) has decided to help globalize India’s home-grown payments service, Unified Payments Interface (UPI). This instant real-time payment system was developed by the National Payments Corporation of India (NPCI) in 2016 and allows individuals to use a single app to make peer-to-peer payments to or from multiple bank accounts.

Third parties can include UPI in their payment systems or apps, with payments flowing smoothly between all participants. The interface has more than 300 million active users and manages around 10 billion transactions per month. The traffic is not far behind Mastercard Inc. (MA) and nearly half the volume that Visa Inc. (V) handles.

UPI is ubiquitous in India and is one of the largest retail payment systems in terms of transaction value and volume. The payment service has already been made available in other nations, partly to assist Indian tourists as they travel and to facilitate cross-border transactions.

Now, Google has decided to spread these use cases around the globe. On January 18, 2024, Google Pay India and NPCI International Payments Ltd (NIPL), a wholly owned subsidiary of NPCI, signed a Memorandum of Understanding (MoU) to broaden the transformative impact of UPI to nations beyond India.

The MoU has three key objectives. Firstly, it seeks to expand the use of UPI payments for travelers out of India, allowing them to make transactions abroad seamlessly and conveniently. Secondly, it will help establish UPI-like digital payment systems in other countries, offering a model for seamless financial transactions.

Lastly, the MoU intends to ease the process of remittances between countries by utilizing the UPI infrastructure, thereby simplifying cross-border financial exchanges. These listed objectives are expected to accelerate UPI’s global acceptance, providing foreign merchants easy access to Indian customers who will no longer have to depend only on foreign currency and credit or forex cards to make payments.

“We are delighted to support NIPL towards expanding the reach of UPI to international markets. Google Pay has been a proud and willing collaborator to NPCI and the financial ecosystem, under the regulator’s guidance, and this collaboration is another step towards our commitment to making payments simple, safe and convenient,” said Deeksha Kaushal, Director, Partnerships, Google Pay India.

With this strategic collaboration, Google will not only create new digital finance opportunities for itself but also support the Indian government’s initiative to take UPI global.

India’s Digital Diplomacy Strategy

The recently signed MoU aligns with NPCI’s endeavor to boost India’s position in the global digital payment landscape. India’s Prime Minister Narendra Modi has been vocal on the government’s ambitions to take UPI global. At the BRICS summit in August last year, Modi noted that UPI had expanded to other nations, including the UAE, Singapore, and France.

“There are many possibilities of working on this with BRICS countries as well,” he stated.

Further, in an exclusive interview with Business Today, Modi highlighted the fact that 46% of global digital payment transactions today are in India, which he described as “one shining example of the success of our policies,” adding that “the world today sees India as the incubator of innovation.”

Last year, India also topped the global remittance charts. According to a recent report, the World Bank noted that India’s remittance inflows totaled $125 billion in 2023, the highest in the world and well ahead of Mexico ($67 billion) and China ($50 billion). Annual growth was a brisk 12.4%.

GOOGL’s stock has advanced more than 19% over the past six months and nearly 57% over the past year.

Here are other factors that could impact GOOGL’s performance in the near term:

Google’s Remarkable AI Progress

2023 has been a year of significant progress for GOOGL in the field of Artificial Intelligence (AI) research and its practical applications. With generative AI, the company is reimagining its products and services. In February 2023, Google launched Bard, its conversational AI service powered by LaMDA. This tool can generate text, translate languages, write different kinds of creative content, and more.

In May, the tech giant reviewed the results of months and years of its foundational and applied work announced on stage at Google I/O. This included its next-generation large language model (LLM), PaLM 2, which is built on advanced compute-optimal scaling, scaled instruction-fine tuning, and enhanced dataset mixture.

By fine-tuning and instruction-tuning PaLM 2 for multiple purposes, the company was able to integrate it into more than 25 Google products and features, including an update to Bard, which enabled multilingual capabilities.

In addition, Search Generative Experience (SDE) uses LLMs to reimagine how to organize information and help people navigate through, creating a more fluid, conversational interaction model for its core Search product, MakerSuite, an easy-to-use prototyping environment for the PaLM API powered by PaLM 2, and many more developments.

The company also introduced DuetAI, its AI-powered collaborator that offers users assistance when they use Google Workspace and Google Cloud.

In June, Google unveiled Imagen Editor, which offers the ability to use region masks and natural language prompts to edit generative images. Later last year, Imagen 2 was released, which improved outputs through a specialized image aesthetics model based on human preferences for qualities like lighting, exposure, and framing.

Further, on November 22, in collaboration with YouTube, the company announced a new DeepMind model, Lyria. It is the most advanced AI music generative model to date that will create vocals, lyrics, and background tracks mimicking the style of popular artists. This model is available on YouTube through two distinct AI experiments – DreamTrack for Shorts and Music AI tools.

Then, in December, GOOGL launched Gemini. Gemini will include a suite of three different sizes: Gemini Ultra, its largest, most capable category; Gemini Pro, which scales across a wide range of tasks; and Gemini Nano, which will be used for specific tasks and mobile devices.

Robust Last Reported Financials

For the third quarter that ended September 30, 2023, Google parent Alphabet’s revenue came in at $76.69 billion, beating analysts’ estimate of $75.73 billion. This compared to revenue of $69.09 billion in the same quarter of 2022.

The company’s Google advertising revenues were $59.65 billion, an increase of 9.5% year-over-year, and its Google Cloud revenues grew 22.5% from the year-ago value to $8.41 billion. Its income from operations came in at $21.34 billion, up 24.6% from the prior year’s quarter.

GOOGL’s income before income taxes rose 30.6% year-over-year to $21.20 billion. The company’s net income rose 41.5% year-over-year to $19.69 billion. It posted net income per share of Class A, Class B, and Class C stock of $1.55, compared to the consensus estimate of $1.45, and up 46.2% year-over-year.

Furthermore, as of September 30, 2023, the company’s cash and cash equivalents stood at $30.70 billion, compared to $21.88 billion as of December 31, 2022. Its current assets were $176.31 billion versus $164.80 billion as of December 31, 2022.

Sundar Pichai, Alphabet’s CEO, said, “I’m pleased with our financial results and our product momentum this quarter, with AIdriven innovations across Search, YouTube, Cloud, our Pixel devices and more. We’re continuing to focus on making AI more helpful for everyone; there’s exciting progress and lots more to come.”

Solid Historical Growth

GOOGL’s revenue grew at a 20.1% CAGR over the past three years. Over the same period, the company’s EBITDA and operation income (EBIT) improved at CAGRs of 26% and 32.7%, respectively. Further, its net income and EPS grew at respective CAGRs of 23.2% and 26.3% over the same timeframe.

Additionally, the company’s total assets grew at a CAGR of 9.9% over the past three years, and its levered free cash flow improved at a 36% CAGR.

Optimistic Analyst Estimates

Analysts expect GOOGL’s revenue for the fourth quarter (ended December 2023) to increase 12% year-over-year to $85.20 billion. The consensus EPS estimate of $1.60 for the current quarter indicates a 52.21% year-over-year improvement. Moreover, the company surpassed consensus revenue and EPS estimates in three of the trailing four quarters, which is impressive.

In addition, Street expects GOOGL’s revenue and EPS for the fiscal year (ended December 2023) to increase 8.1% and 26% year-over-year to $305.77 billion and $5.74, respectively. For the fiscal year 2024, the company’s revenue and EPS are expected to grow 11.3% and 15.9% year-over-year to $340.26 billion and $6.66, respectively.

High Profitability

GOOGL’s trailing-12-month gross profit margin of 56.12% is 14.1% higher than the 49.18% industry average. Also, the stock’s trailing-12-month EBIT margin and net income margin of 27.42% and 22.46% are considerably higher than the industry averages of 8.56% and 3.27%, respectively.

Moreover, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 25.33%, 17.36%, and 16.82% are favorably compared to the respective industry averages of 3.53%, 3.48%, and 1.38%. Its trailing-12-month levered FCF margin of 23.81% is 200.2% higher than the industry average of 7.93%.

Bottom Line

Alphabet’s shares climbed nearly 58% last year as tech stocks rallied after a disastrous 2022, driven partly by excitement about AI. The company reported an impressive revenue growth of 11%, returning to double digits for the first time in more than a year alongside a recovery in the digital ad market. Sales and profit both surpassed analysts’ expectations.

Moreover, for GOOGL, 2023 was a remarkable year of groundbreaking advances in AI and computing. Last week, in a memo titled “2024 priorities and the year ahead” that staffers received, Google CEO Sundar Pichai stated that the company has ambitious goals and will be investing in its big priorities this year. This includes AI and spans Google’s consumer to enterprise platforms.

Analysts at JP Morgan named GOOGL as one of their top picks for 2024, with AI primarily assisting in the stock’s significant growth.

GOOGL's partnership with the National Payment Corporation of India (NPCI) is geared toward extending India's UPI's reach globally, which is expected to yield advantages for the company.

This partnership seems like a suitable strategic move that would support a vital policy objective of the Indian government to broaden the digital payments landscape and provide Google Pay with new growth opportunities.

Considering these factors, GOOGL seems to be a must-have stock for any investment portfolio.