Google is expanding its AI empire — and losing the people who built it

Google is expanding its AI empire — and losing the people who built it Google’s cloud boom is testing the company's commitment to frontier AI as commercial returns take priority. Jeff Dean’s departure and Demis Hassabis’ move away from daily management of DeepMind add to questions about Google’s ability to retain top talent and stay at the frontier. Google Cloud’s 82% growth in the second quarter strengthens the case for prioritizing infrastructure, efficient models and enterprise AI services. Demis Hassabis, co-founder of DeepMind Technologies Photographer: Jose Sarmento Matos/Bloomberg via Getty Images Bloomberg | Bloomberg | Getty Images Depending on where you sit, Google either has the most enviable position in artificial intelligence or is bleeding top talent to leading AI labs and other startups on the frontline of innovation. It's a contrast that's been on full display over the past two weeks, beginning with the company reporting 82% revenue growth in its cloud division, followed by a shakeup on Wednesday in Google's AI organization, as chief scientist Jeff Dean announced his departure after 27 years. For Google, home to the famous 2017 transformer paper that paved the way for the generative AI boom, the recent events underscore a central challenge facing the $4 trillion company: where to invest. Building frontier models requires huge upfront costs for compute and research with no guarantee of future returns, while the cloud business is proving to be highly efficient and is growing much faster than rival offerings at Amazon and Microsoft . Alphabet CEO Sundar Pichai said on last month's earnings call that 90% of Fortune 100 companies are using Gemini Enterprise, underscoring the company's ability to sell AI services to cloud customers. Tomasz Tunguz, founder of Theory ventures, said it's becoming clear that top-of-the-line models aren't required when it comes to meeting most enterprise demand. "I think we are at that place with AI, particularly for a lot of white-collar work, where many of the models that are reasonable are good enough," Tunguz said. "The next evolution of models are likely to be helpful in domains where you have really fancy computers." Google's full-stack approach to AI is a big reason the stock is up 16% this year after jumping 65% in 2025, when it outpaced all of its megacap peers. It's been a bumpier road of late. Alphabet shares fell after the latest earnings report due to concerns about capital expenditures, and dipped further on Wednesday following the announcement that Dean is departing and Demis Hassabis is stepping down as CEO of Google DeepMind to become chairman of the unit. watch now VIDEO 2:25 02:25 Alphabet shares fall after major shakeup at Google’s AI unit Power Lunch While the tone on Wall Street has been generally favorable, not everyone is celebrating inside of Google. Some researchers have grown frustrated over access to the computing capacity they need to pursue ambitious projects while watching Google Cloud sell TPUs to outside customers, including Anthropic, according to people familiar with the matter who asked not to be named due to confidentiality. Tensor processing units, or TPUs, are the the company's homegrown AI chips that compete with Nvidia's graphics processing units. Google's bureaucracy is a common source of frustration, with layers of approval required to move research into products. That can make emerging companies like OpenAI, Anthropic or even younger startups more appealing, especially for AI researchers and developers who prefer lab work to balance sheets. Dean is leaving along with Google stars Sanjay Ghemawat, Oriol Vinyals, and Quoc Le to start Discovery Loop. On X, Dean said the startup, backed by Google, will be a public benefit corporation "whose mission is to autom...