AI will take center stage as Microsoft and Google increase their revenue
Big tech giants Microsoft and Alphabet – Google's parent company – released their second-quarter earnings reports, citing strong growth in their strategic investments in artificial intelligence (AI).
The latest earnings reports released on April 25 showed a clear picture that the AI market is still growing and has played a significant role in growth while boosting productivity and financial performance.
Microsoft speed
Microsoft has forecast a 17 percent increase in revenue from $52.9 billion to $61.9 billion in 2023. The company also posted a 20 percent increase in revenue to $21.9 billion, beating analysts' forecasts in both cases.
A major contributor to this growth was the company's integration of AI into its offerings, particularly highlighted by its cloud computing product Azure, which saw 31% growth.
Azure Generative AI Services played a major role in driving this expansion, attracting 53,000 customers, a third of whom were new to the platform. In many of its recent deals, Microsoft has included the use of Azure for partner companies.
One example from April 16 is a $1.5 billion deal with Abu Dhabi AI tech holding company G42 that will see the company use Azure to run its AI applications and services.
Microsoft Chief Financial Officer Amy Hood commented on the crisis:
“The demand for the latest AI is a bit higher than our capabilities.”
To meet this demand, the company is investing in data centers and other AI infrastructure by increasing the “materials” of capital expenditures. Microsoft's cloud revenue stood at $35.1 billion in the quarter, a 23 percent year-over-year increase.
RELATED: Mistral AI Startup ChatGPT, Gemini and Cloud Launches LLM
In January, Microsoft released the Pro version of its AI assistant Copilot, which includes custom GPTs and Office tools. The company has been active in investing in AI infrastructure around the world.
Its $13 billion deal with major AI developer OpenAI has also been cited as a milestone in its success.
Alphabet AI combinations
Similarly, Alphabet reported quarterly sales of $80.5 billion, a 15 percent increase from 2023, and a 36 percent rise in profits to $23.7 billion. Again, both exceeded expectations.
Google's integration of AI into its product ecosystem, from search engines to YouTube and Google Docs, is a key driver of its success, highlighted by its massive investment of $11.9 billion in AI research and development in the first three months of the year.
During the call, Alphabet CEO Sundar Pichai emphasized the company's focus on leveraging AI to enhance the search experience while increasing ad revenue.
“We're measuring the way we do this by focusing on areas where Gen AI can improve the search experience, and prioritizing traffic for websites and merchants.”
The company announced its first ever dividend of 20 cents a share in June. In addition, he authorized a $70 billion share buyback program, showing his confidence in the future.
Google has faced challenges in the field of AI, such as the recent scandal over its AI chatbot Gemini, which was criticized by internet users for serving “enhanced” content and historically inaccurate images. As a result, the company apologized.
However, during the call, Pichai expressed optimism and confidence in Google's infrastructure, which he said is “perfect for the AI era” after years of investment.
Contrasting strategies between the former Facebook, Microsoft, Google and Meta are evident in their approaches to investment in IP.
In the year Despite Microsoft and Google prioritizing AI integration after announcing plans to “invest aggressively” in its AI products by 2024, Meta's stock fell 15% this week.
Magazine: How to get better crypto predictions than chatgpt, Humane AI pin slammed: AI Eye
