Microsoft and Google on Thursday drubbed quarterly earnings expectations as the tech titans continued investing heavily in artificial intelligence promising to shake up the way people live.
The results were cheered by Wall Street investors who pushed
up Alphabet’s share price more than 11 percent and Microsoft shares up nearly 4
percent in after-market trades.
Google parent Alphabet reported profit of $23.7 billion on
revenue of $80.5 billion, crediting growth in cloud computing, YouTube, and
online search advertising.
Artificial intelligence helped drive the Silicon Valley tech
giant’s business, according to Alphabet and Google chief Sundar Pichai.
“We are well under way with 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.”
Some $9.5 billion was brought in by Google’s cloud computing
unit, compared with $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 not
assured, the analyst cautioned.
Google faces an antitrust case in the United States, and the
incorporation of AI-generated content into the company’s leading search engine “will
arguably be the biggest change to the search advertising market since its
inception,” Mitchell-Wolf said.
The earnings come as Google, Microsoft, Amazon and other
rivals competing in the hot field of AI face scrutiny from regulators in the US
and Europe.
The US Federal Trade Commission early this year launched a
study of AI investments and alliances as part of an effort to make sure
regulatory oversight can keep up with developments in the sector and stop major
players from shutting out competitors in a field promising upheaval in multiple
areas of business.
Amazon – through its Amazon Web Services arm – Microsoft and
Google are the world’s biggest providers of cloud-based data centers, which
store and process data on a vast scale, in addition to being some of the world’s
richest companies.
Microsoft CEO Satya Nadella said sales in the January to
March period rose by 17 percent from a year earlier to $61.9 billion, with net
profit up by 20 percent to $21.9 billion.
Microsoft has been hugely rewarded by investors since it
aggressively pushed into rolling out generative AI, starting with its $13
billion partnership with OpenAI, the creator of ChatGPT, in 2023.
The embrace of AI has boosted sales of its key cloud
services, such as Azure, which have become the core of Microsoft’s business
under Nadella’s leadership.
Cloud giants Amazon and Google are also looking to beef up
cloud sales by rolling out AI features to clients and prove 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 hired DeepMind AI
and Inflection AI co-founder Mustafa Suleyman to lead up its AI unit, poaching
one of the industry’s key figures from a promising startup.
The succession of moves has often taken archrival Google by
surprise and seen Microsoft pip Apple as the world’s biggest publicly traded
company.
“Microsoft’s earnings show the company is well-positioned to
profit from the AI revolution it helped unleash,” said Emarketer senior
director of briefings Jeremy Goldman.
“While monetizing AI as effectively as Google remains a
challenge, Microsoft has positioned itself in the realm of consideration for ad
buys – something that wasn’t necessarily the case even a few years ago.”
Meta’s results on Wednesday however were a first sign of AI
fatigue.
The Facebook parent said its quarterly profits soared last
quarter but worries over its spending on artificial intelligence saw its share
price take a hit.
A potential dark cloud for AI is government regulators that
are taking a closer look at Microsoft’s ties with OpenAI and others amid fears
that the giant is using its huge financial war chest to thwart the emergence of
rivals.
Britain’s competition watchdog on Wednesday was the latest
to begin examining tie-ups between artificial intelligence firms and their US
big tech partners, including Microsoft.
0 comments:
Post a Comment