Alphabet shares dipped around 4% on Wednesday after the company announced a major restructuring of its artificial intelligence division, which includes the departure of longtime Chief Scientist Jeff Dean.
Jeff Dean, a pioneer in AI who has been with the company for 27 years and played a key role in many of its most significant technological breakthroughs, is leaving to start a new venture with Senior Fellow Sanjay Ghemawat. A company representative confirmed that the departure is amicable, and Alphabet plans to invest in his startup.
Demis Hassabis, the CEO of Google DeepMind, will transition to the role of Chairman of the division and also serve as the Chief Scientist for parent company Alphabet, according to a memo posted by CEO Sundar Pichai.
What's driving the changes?
Sundar Pichai stated in his blog post, "After an incredible 27 years, Jeff Dean is now ready to try something new, and we are excited to support him." He added that Dean and Ghemawat will focus on "accelerating discovery in machine learning, science, and engineering." Their new company, which Dean confirmed on X (formerly Twitter) will be called Discovery Loop, is structured as a public benefit corporation dedicated to AI in science and engineering.
In the restructuring, Google DeepMind technical lead Koray Kavukcuoglu has been promoted to head of the AI division. He will lead the development of the next major AI model, Gemini 4, and report directly to Pichai. Hassabis, who co-founded DeepMind and joined the company when Alphabet acquired it in 2014, has led nearly all of Alphabet's foundational AI work in recent years. In a note to employees, Hassabis said, "I have decided that now is the right time to hand over the day-to-day operating responsibilities of GDM (Google DeepMind), so that I have the time and space to focus on the big picture and influence the future as much as I can." He added that he will work with Pichai on "strategic and global" AI-related matters.
How is the cloud business performing?
From a growth perspective, Alphabet has been performing well in AI. Its cloud division, led by Thomas Kurian, is expanding much faster than larger competitors Amazon Web Services and Microsoft Azure. Google Cloud revenue surged 82% in the second quarter to $24.8 billion. In comparison, AWS revenue grew 37%, while Azure sales rose 43% during the same period. Pichai noted on the earnings call that cloud growth was driven by AI infrastructure and AI solutions, boosted by demand for the company's custom tensor processing units (TPUs).
The announcement comes a day after Alphabet unveiled three new Gemini models, including its clearest response yet to Anthropic's leadership in cybersecurity, though it has yet to release the delayed Gemini 3.5 Pro. "Demand for our models is translating into strong token usage from developers and enterprise customers," Pichai said on the earnings call. "And we continue to be supply-constrained, which is both a sign of momentum and a sign of rapid adoption."
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