by Microsoft and Google cut quarterly earnings expectations on Thursday as the tech titans continue to invest heavily in artificial intelligence that promises to change the way people live.
Wall Street investors applauded the results, which sent Alphabet’s share price up more than 11 percent and Microsoft shares up nearly 4 percent in aftermarket trades.
Google parent Alphabet reported a profit of $23.7 billion on revenue of $80.5 billion, crediting growth in cloud computing, YouTube, and online search advertising.
Artificial intelligence has helped drive the Silicon Valley tech giant’s business, according to Alphabet and Google chief executive Sundar Pichai.
“We’re well into our Gemini era and there’s great momentum across the company,” Pichai said, referring to the Gemini AI model that powers services across the Google platform.
“Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation.”
Google’s cloud computing unit brought in about $9.5 billion, compared to $7.5 billion in the same quarter a year earlier.
Google also reported its first ever dividend of 20 cents per share.
“Things are looking good for Google,” said Emarketer senior analyst Evelyn Mitchell-Wolf.
However, the future of Google’s core search business is uncertain, the analyst warned.
Google is facing an antitrust case in the United States, and the incorporation of AI-generated content into the company’s main search engine is arguably “the biggest change to the search advertising market since its inception,” said Mitchell-Wolf.
The earnings come as Google, Microsoft, Amazon and other rivals competing in the hot field of AI face scrutiny from regulators in the United States and Europe.
The US Federal Trade Commission earlier this year launched a study on AI investments and alliances as part of an effort to ensure that regulatory oversight can keep up with developments in the sector and stop big players from shutting out competitors in a promising field about them in different areas. of business.
Amazon – through its Amazon Web Services arm — Microsoft and Google are the world’s largest providers of cloud-based data centers, which store and process data on a massive scale, as well as being some of the richest companies in world.
Microsoft CEO Satya Nadella said sales in the January-March period rose 17 percent from a year earlier to $61.9 billion, with net profit up 20 percent to $21.9 billion.
Microsoft has reaped huge rewards from investors since it pushed hard to roll out next-generation AI, starting with its $13 billion partnership with OpenAI, the creator of ChatGPT, in 2023.
The adoption of AI has boosted sales of its key cloud services, such as Azure, which has become the core of Microsoft’s business under Nadella’s leadership.
Cloud giants Amazon and Google are trying to increase cloud sales by rolling out AI features to clients and proving that the AI revolution is more than just hype.
In its push, Microsoft has moved beyond OpenAI and signed partnerships with other promising AI startups such as Mistral AI, as well as investing heavily internationally.
In March, Microsoft also announced that it had hired DeepMind AI and Inflection AI co-founder Mustafa Suleyman to lead its AI unit, poaching one of the industry’s leading figures from a promising startup.
– Unreformed revolution –
The succession of moves has often disrupted Google’s filings and Microsoft has often seen Apple pip Apple as the world’s largest publicly traded company.
“Microsoft’s earnings show that the company is in a good position to profit from the AI revolution that it helped unleash,” said Emarketer senior director of the briefings Jeremy Goldman.
“While it’s always a challenge to monetize AI as effectively as Google, Microsoft is in the realm of communion when it comes to ad buys — which wasn’t necessarily the case even a few years ago.”
Wednesday’s Meta results, however, were the first sign of AI fatigue.
Parent Facebook said its quarterly profits rose sharply last quarter but worries about spending on artificial intelligence hit its share price.
A potential dark cloud for AI is government regulators taking a closer look at Microsoft’s ties to OpenAI and others amid fears the giant is using its massive financial war chest to block the emergence of rivals.
Britain’s competition watchdog on Wednesday became the latest to begin examining links between artificial intelligence firms and their major US technology partners, including Microsoft.
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