Google employees question execs over ‘decline in morale’ after blowout earnings
Google’s business is growing at its fastest rate in two years, and a blowout earnings report in April sparked the biggest rally in Alphabet shares since 2015, pushing the company’s market cap past $2 trillion.
But at an all-hands meeting last week with CEO Sundar Pichai and CFO Ruth Porat, employees were more focused on why that performance isn’t translating into higher pay, and how long the company’s cost-cutting measures are going to be in place.
“We’ve noticed a significant decline in morale, increased distrust and a disconnect between leadership and the workforce,” a comment posted on an internal forum ahead of the meeting read. “How does leadership plan to address these concerns and regain the trust, morale and cohesion that have been foundational to our company’s success?”
Google is using artificial intelligence to summarize employee comments and questions for the forum.
Alphabet’s top leadership has been on the defensive for the past few years, as vocal staffers have railed about post-pandemic return-to-office mandates, the company’s cloud contracts with the military, fewer perks and an extended stretch of layoffs — totaling more than 12,000 last year — along with other cost cuts that began when the economy turned in 2022.
Employees have also complained about a lack of trust and demands that they work on tighter deadlines with fewer resources and diminished opportunities for internal advancement.
The internal strife continues despite Alphabet’s better-than-expected first-quarter earnings report, in which the company also announced its first dividend as well as a $70 billion buyback.
“Despite the company’s stellar performance and record earnings, many Googlers have not received meaningful compensation increases” a top-rated employee question read. “When will employee compensation fairly reflect the company’s success and is there a conscious decision to keep wages lower due to a cooling employment market?”
Another highly-rated comment centered around the company’s priorities, including its hefty investments in artificial intelligence.
“To many people, there’s a clear disconnect between spending billions on stock buybacks and dividends and re-investing in AI and retraining critical Googlers,” the post said.
Ruth Porat, Alphabet’s chief financial officer, appears on a panel session at the World Economic Forum in Davos, Switzerland, on May 24, 2022.
Hollie Adams | Bloomberg | Getty Images
“Our priority is to invest in growth,” Porat said, as she took the microphone to respond to questions. “Revenue should be growing faster than expenses.”
She also took the rare step of admitting to leadership’s mistakes in its prior handling of investments.
“The problem is a couple of years ago — two years ago, to be precise — we actually got that upside down and expenses started growing faster than revenues,” said Porat, who announced nearly a year ago that she would be stepping down from the CFO position but hasn’t yet vacated the office. “The problem with that is it’s not sustainable.”
Google executives have been hammering this theme of late.
Search boss Prabhakar Raghavan, in an internal meeting last month, pointed to Google’s core business challenges, saying “things are not like they were 15 to 20 years ago,” and urged employees to work faster. He told his team, “It’s not like life is going to be hunky-dory, forever.”
Google’s cloud business was among units instructing employees to move within shorter timelines even though they had fewer resources after cost cuts.
Google’s use of cash
There were a lot of employee questions ahead of last week’s meeting directed at the company’s buyback, Porat said.
As of last quarter, Alphabet had more than $100 billion in cash on the balance sheet but, Porat said, “you can’t just drain it” or the company would find itself in the same position as in 2022.
By contrast, distributing cash to shareholders is not considered an expense on the balance sheet, she said, adding that the board has a fiduciary duty to consider such measures. Buybacks and dividends don’t replace investments in AI, Porat said.
Pichai chimed in when Porat wrapped up her response.
“I think you almost set the record for the longest TGIF answer,” he said. Google all-hands meetings were originally called TGIFs because they took place on Fridays, but now they can occur on other days of the week.
Pichai then joked that leadership should hold a “Finance 101” Ted Talk for employees.
With respect to the decline in morale brought up by employees, Pichai said “leadership has a lot of responsibility here, adding that “it’s an iterative process.”
Pichai said the company staffed up too much during the Covid pandemic.
“We hired a lot of employees and from there, we have had course correction,” Pichai said.
Alphabet’s full-time headcount climbed to over 190,000 at the end of 2022, up almost 22% from a year earlier and 40% higher than at the close of 2020.
Pichai, who replaced Google co-founder Larry Page as CEO of Alphabet in 2019, has taken his share of criticism of late for his messaging to the workforce as well as his lofty pay package, which swelled to $226 million, including stock awards, in 2022.
The package in 2022 included $218 million in equities through a triennial stock grant. His total pay in 2023 was $8.8 million, up from about $8 million the prior year (excluding the stock grant), according to Alphabet’s proxy filing. Other than Pichai’s $2 million salary for each year, most of his additional compensation was for personal security.
Employees have complained about the level of Pichai’s compensation at a time when the company is downsizing.
“Given the recent headcount and positive earnings, what is the company’s headcount strategy?” one question read. Another asked, “Given the strong results, are we done with cost-cutting?”
Pichai said the company is “working through a long period of transition as a company” which includes cutting expenses and “driving efficiencies.” Regarding the latter point, he said, “We want to do this forever.”
“To be clear, we’re growing our expenses as a company this year, but we’re moderating our pace of growth” Pichai said. “We see opportunities where we can re-allocate people and get things done.”
A Google spokesperson reiterated to CNBC that the company is investing in its biggest priorities and will continue to hire in those areas.
The spokesperson also said most employees will receive a pay raise this year, including an increased salary, equity grants and a bonus. Executives at the all-hands meeting said that staffers who received raises last year got smaller raises than usual.
Another comment floated ahead of the meeting was tied to “growing concerns about jobs moving from the U.S. to lower-cost locations.” CNBC reported last week that Google is laying off at least 200 employees from its “Core” organization, which includes key teams and engineering talent.
Executives were asked about the ongoing layoffs, despite the strong earnings report, and “when can we expect an end to the uncertainty and disruption that layoffs create?”
Pichai said the company will have worked through the majority of layoffs in the first half of 2024.
“Assuming current conditions, the second half of the year will be much smaller in scale,” Pichai said, referring to job cuts. He said it will continue to be “very, very disciplined about managing headcount growth throughout the year.”
That means the company is still making tough choices regarding investments in new projects.
“There’s a lot of demand to do new things and, in the past, we would have just done it reflexively by growing headcount,” Pichai said. “We can’t do it now through the transition we are in.”
WATCH: Alphabet’s investor call had a ‘remarkable’ level of transparency, says Jim Cramer
The Omada Health logo is displayed on a smartphone screen.
Sopa Images | Lightrocket | Getty Images
Omada Health reported quarterly results for the first time since its IPO in June.
Here’s how the company did based on average analysts’ estimates compiled by LSEG:
- Loss: Loss per share of 24 cents.
- Revenue: $61 million vs. $55.2 million expected
The virtual care company’s revenue increased 49% in its second quarter from $41.21 million a year earlier. The company reported a net loss of $5.31 million, or a 24-cent loss per share, compared to a net loss of $10.69 million, or $1.40 loss per share, during the same period last year.
“We believe our Q2 performance reflects Omada’s ability to capture tailwinds in cardiometabolic care, to effectively commercialize our GLP-1 Care Track, and to leverage advances in artificial intelligence for the benefit of our members,” Omada CEO Sean Duffy said in a release.
For its full year, Omada expects to report revenue between $235 million to $241 million, while analysts were expecting $222 million. The company said it expects to report an adjusted EBITDA loss of $9 million to $5 million for the full year, while analysts polled by FactSet expected a wider loss of $20.2 million.
Omada, founded in 2012, offers virtual care programs to support patients with chronic conditions like prediabetes, diabetes and hypertension. The company describes its approach as a “between-visit care model” that is complementary to the broader health-care ecosystem.
The stock opened at $23 in its debut on the Nasdaq in June. At market close on Thursday, shares closed at $19.46.
Omada said it finished its second quarter with 752,000 total members, up 52% year over year.
The company will discuss the results during its quarterly call with investors at 4:30 p.m. ET.
WATCH: Omada Health CEO Sean Duffy on IPO debut: Today is the right moment for us
WASHINGTON, DC August 6: US President Donald Trump shakes hands with CEO of Apple Tim Cook during a meeting in the Oval Office of the White House on Wednesday August 6, 2025.
Demetrius Freeman | The Washington Post | Getty Images
President Donald Trump has made clear that he wants Apple to make iPhones in the U.S.
Apple CEO Tim Cook is doing what he can to appease the commander in chief, without making that ultimate concession.
Cook on Wednesday appeared at the White House with President Trump to announce plans to spend about $600 billion over four years in the U.S. Apple didn’t announce the made-in-USA iPhone that Trump wants, but Cook got to tout Apple’s position on U.S. production.
Some of Apple’s most valuable parts, such as its glass and facial recognition sensor, are made by U.S. companies that Apple has worked with for years. Final assembly is only a small, though very critical, part of iPhone production.
“The final assembly that you focus on, that will be elsewhere for a while,” Cook said Wednesday in the Oval Office.
Trump appeared happy enough, for now.
“He makes many of the components here, and we’ve been talking about it,” Trump said. “The whole thing is set up in other places, and it’s been there for a long time in terms of cost and all, but I think we may incentivize him enough that one day he’ll be bringing that back.”
Experts said Cook’s announcement seemed designed to get Apple out of Trump’s crosshairs with respect to tariffs. Trump announced during the public meeting that the administration planned to place a tariff on chips that would double their price, but Apple — which relies on hundreds of different chips for its devices — would be exempt.
“CEOs are realizing that they do have to do something, and what they’ve discovered is that if they give the president something to brag about without destroying their company, that the problem might go away for a certain amount of time,” said Peter Cohan, professor of strategy and entrepreneurship at Babson College who has written case studies on Apple.
The gambit worked. Apple stock rose 5% on Wednesday and another 3% on Thursday.
“What Tim Cook demonstrated in the first administration was a real savvy navigation of the treacherous waters,” said Nancy Tengler, CEO of Laffer Tengler Investments, which holds a position in Apple. “I thought this announcement was super-important symbolically, because the president is looking for headlines.”
What Apple announced
A gift given by Apple CEO Tim Cook to U.S. President Donald Trump stands on President Trump’s table, as they present Apple’s announcement of a $100 billion investment in U.S. manufacturing, in the Oval Office at the White House in Washington, D.C., U.S., August 6, 2025.
Jonathan Ernst | Reuters
The centerpiece of Apple’s announcement was the so-called American Manufacturing Program, which Apple said was designed to incentivize other companies to make parts for computers in the U.S.
By Apple committing to purchase parts and expand its relationship with U.S. suppliers, it could give those companies the skills and capacity to expand their business. And it lets Apple take some credit for supporting the 450,000 total jobs at its suppliers.
A closer look at the members of the program shows that Apple is leaning on some of its longest-tenured partners. All together, Apple said that its U.S. suppliers are on track to make 19 billion chips for its products this year. That level of business doesn’t appear overnight.
For example, Apple said that all of its cover glass for iPhones and Apple Watches would be made by Corning, in Kentucky, and that it would spend $2.5 billion on that effort. It’s a powerful symbol — while the phone might be screwed together in China or India, the surface that users touch around the world will be made in the U.S.
But Apple has pointed to Corning as a critical American supplier in the past. The company’s glass has been used on the iPhone since its first version in 2007. While Apple typically doesn’t let its suppliers talk about their relationships, former COO Jeff Williams hailed Corning’s glass in 2017, when it got an “investment” from the Apple Advanced Manufacturing Fund. Apple followed that up with a $250 million commitment in 2019, and $45 million in 2021.
Analysts are skeptical that the partnership could substantially improve Corning’s revenue. Morgan Stanley analysts wrote on Thursday that Corning “already produces 100% of the cover glass for Apple’s phones and tablets,” adding that Corning’s glass business called Specialty Materials is worth about $2 billion per year.
Apple also highlighted its partnership with Coherent, a longtime supplier of lasers for Apple’s facial recognition hardware, which is made in Texas. Morgan Stanley pegged the business at about $100 million per year, and said Apple has options including Lumentum and Sony.
The iPhone maker said it expanded a partnership with Texas Instruments to make chips in Texas and Utah. Texas Instruments has long supplied chips for the iPhone, such as circuits to control USB interfaces or power displays. Apple said it would partner with Samsung, another key supplier of parts like iPhone displays, to launch an “innovative new technology for making chips,” without offering additional details.
Apple declared that it will partner directly with companies in the semiconductor chain, even if they typically sell services or goods to Apple suppliers. Other partnerships are with Applied Materials, a tooling company, GlobalFoundries, a chip foundry, and GlobalWafers America, which is suppling Taiwan Semiconductor Manufacturing Company and Texas Instruments with made-in-USA wafers, the starting point for a batch of chips.
GlobalFoundries manufactures chips for Broadcom, which supplies wireless chips for iPhones. Both will work with Apple to develop and manufacture 5G components in the U.S.
Meanwhile, Apple will buy millions of advanced chips made by TSMC in Arizona, where it will be the factory’s largest customer. Cook joined former President Biden at the plant in 2022 and committed to buying chips from the factory.
Apple said it would invest in and become a customer at an Arizona Amkor facility, which packages and tests chips, the final stage before installation in a computer.
Apple also said it would expand existing data centers for artificial intelligence in North Carolina, Iowa, Nevada and Oregon. It’s highlighted these data centers in the past in spending commitments.
While Apple’s announcement sent partner stocks up, JPMorgan Chase analysts warned in a note on Thursday that “the new and expanded engagements might not be completely incremental to global revenues and outlook.”
Trump had a different take.
“Oh, I love that you’re doing this,” the president said, after reading a list of Apple’s commitments.
‘Cost of doing business’
Apple has little to worry about when it comes to who will hold the company accountable for its promises. The company doesn’t break out U.S. spending, and most of Apple’s suppliers are contractually required to keep the information secret. Apple doesn’t report how much its new campuses in Austin or North Carolina end up costing.
Additionally, the $600 billion headline number likely includes lots of regular expenses.
Apple said in February that its $500 billion commitment included payments to U.S. suppliers, direct employment, data centers for Apple Intelligence and corporate facilities, as well as spending on Apple TV+ productions in 20 states.
Apple started publicly announcing U.S. spending during Trump’s first administration in 2018, at a rate of about $70 billion per year. In February, the company committed to $125 billion per year. Wednesday’s announcement brings that figure to $150 billion annually.
That’s still a fraction of Apple’s total spending.
In Apple’s fiscal 2024, Apple spent $210 billion globally on cost of goods sold, $57.5 billion on operating expenses, and $9.45 billion in capital expenditures for nearly $275 billion in global spending during the period.
Teffler said she didn’t think the newly announced spending would be material to Apple’s profitability, especially since it already has relationships with the various companies such as Corning.
“They’re going to spend money somewhere,” Tegler said.
Wedbush analyst Dan Ives, who previously predicted a made-in-USA iPhone would cost billions to produce and would leave consumers paying $3,500, said the Wednesday announcements indicate a much different approach. He said it’s “the cost of doing business.”
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