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The tech titan has found itself under pressure due to a
general slowdown in advertising spending, over-hiring during a Covid-era boom
and a major challenge by Microsoft on artificial intelligence.
Its quarterly revenue came in at nearly $70 billion, a
billion better than expected by analysts, and in the same three-month period
that the company said it would lay off 12,000 staff, or six percent of its
workforce.
Microsoft's results for the first three months of the year
also pleased investors on Tuesday, lifted by its industry-leading business
cloud products.
The company founded by Bill Gates reported profit of $18.3
billion on revenue of $52.9 billion as Cloud and AI more than offset drops in
revenue from licensing Windows software to computer makers, as sales suffer in
that market.
Most market attention was on Google, which became a focus of
worry when Microsoft-backed ChatGPT was released and quickly went viral late
last year. The Windows maker has added the technology to its Bing search engine
and office software.
The search giant has since rushed out Bard, its own version
of the language-based AI, but the release was seen as clumsy and has so far
disappointed observers and company insiders, according to media reports.
"We'll continue to incorporate generative AI advances
to make search better in a thoughtful and deliberate way," Google chief
Sundar Pichai said during an earnings call.
"And we will test and iterate as we go because we know
that billions of people trust Google to provide the right information."
An arms race over AI is expected to play out for several
years and could prove to be expensive for the tech giants.
To get itself battle ready for the AI wars ahead, Google has
reorganized its AI division, putting the independently run Deep Mind subsidiary
inside the company in a division called Google Brain.
- 'Serious challenges' - The threat from an AI-augmented
Bing sent Pichai on a rare US media tour recently to reassure that the company
remained an industry leader on everything from search to maps to AI pioneering.
Despite headwinds, Pichai received a total compensation
package worth more than $225 million in 2022, according to a regulatory filing
posted last week.
Google-owned YouTube's advertising revenue dropped for the
third quarter in a row. However, there was "strong watchtime growth"
at a YouTube Shorts section added to counter TikTok .
During the quarter, YouTube chief Susan Wojcicki stepped
down after nine years, replaced by longtime executive Neal Mohan.
"Google exceeded both revenue and earnings expectations
this quarter, but reasons for investor optimism are modest," said Insider
Intelligence senior analyst Max Willens.
"Google's core business is facing the most serious
challenges it has encountered in quite some time."
Despite challenges, Alphabet's share price has recovered
well from lows seen before January's layoff announcements and on Tuesday shot
up by more than 4 percent in after-hours trading to $108.4.
This was still well shy of the near $150 seen in 2021, when
ad revenue was pouring in.
Microsoft has been steadily pressing on with its AI
revolution, recently announcing that it would apply the powers behind ChatGPT
to its iconic Excel, Word and Outlook programs.
The Redmond, Washington giant has been swiftly adopting
language-based AI, showing less caution than its rivals despite early problems
such as chatbots giving disturbing responses or blatantly inaccurate
information.
"We see that when people use the new AI features, their
engagement with Bing and Edge goes up," Microsoft chief Satya Nadella said
during an earnings call.
"We look forward to continuing this journey in what is
a generational shift in the largest software category - search."