SAN FRANCISCO, April 26 — Microsoft and Google yesterday 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 per cent and Microsoft shares up nearly 4 per cent in after-market trades.
Google parent Alphabet reported profit of US$23.7 billion (RM121.5 billion) on revenue of US$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 US$9.5 billion was brought in by Google’s cloud computing unit, compared with US$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 centres, 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 per cent from a year earlier to US$61.9 billion, with net profit up by 20 per cent to US$21.9 billion.
Microsoft has been hugely rewarded by investors since it aggressively pushed into rolling out generative AI, starting with its US$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.
Unleashed revolution
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 monetising 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. — AFP
