Alphabet and Microsoft Post Strong Earnings Amid Cloud and AI Demand

Alphabet and Microsoft Post Strong Earnings Amid Cloud and AI Demand

VoM News Desk | October 25, 2023 | 11:33 AM IST | Breaking News | Follow on Google News

Alphabet and Microsoft Post Strong Earnings Amid Cloud and AI Demand

Alphabet and Microsoft Post Strong Earnings Amid Cloud and AI Demand

In a recent earnings release, both Google’s parent company, Alphabet, and tech giant Microsoft showcased impressive financial results. These quarterly profits reflect the growing demand for cloud computing, especially when combined with artificial intelligence. Microsoft’s performance garnered enthusiasm in the stock market, with its shares rising more than 3 percent to $341.11.

Google Cloud Falls Short of Expectations While Microsoft Soars

Alphabet, on the other hand, saw its share prices slip by over 5 percent to $129.67 in after-market trading. Although they exceeded overall earnings expectations, investors had hoped for stronger results from Google Cloud. “Google Cloud missed consensus revenue expectations on slowing growth,” noted Baird Equity Research analyst Colin Sebastian, highlighting concerns about the pace at which newer generative artificial intelligence workloads would drive growth.

Alphabet reported a quarterly profit of $19.7 billion, mainly driven by revenue from ads, YouTube, and cloud services. The company’s revenue reached $76.7 billion, a notable increase from the $69 billion recorded in the same period a year earlier. Alphabet’s CEO, Sundar Pichai, expressed excitement about the potential of artificial intelligence, emphasizing its role as a foundational platform shift across their business.

AI Dominance and Market Competition

Google, Microsoft, and OpenAI are all recognized leaders in the field of artificial intelligence. While Microsoft has aggressively integrated AI capabilities into its Bing search engine, Google continues to dominate the global search market with approximately 90 percent market share. Despite AI being a significant driver of stock price growth for tech companies, Google faces stiff competition in the cloud computing arena, which is more unpredictable than advertising.

While Google’s AI initiatives may pay off in the long term, its Cloud division has yet to fully satisfy investors. In the latest quarter, the revenue for Alphabet’s cloud division, where AI plays a significant role, reached $8.4 billion, a noticeable increase from the $6.7 billion in the same quarter the previous year.

Microsoft’s Cloud and AI Thrive

Meanwhile, Microsoft’s earnings highlighted its strength in the cloud services sector. The company reported a net income of $22.3 billion for the July to September period, representing a 27 percent increase from the previous year. Key to Microsoft’s success is its Azure cloud service, which competes with Amazon’s AWS and Google Cloud. Azure and other cloud services showed a revenue growth of 29 percent from the previous year, with the company achieving $56.5 billion in sales for the quarter.

Microsoft’s push to infuse AI throughout its tech stack and business processes is gaining momentum, with CEO Satya Nadella noting that they are making the age of AI a reality for individuals and businesses.

These results come on the heels of Microsoft’s major acquisition of Activision Blizzard, a move that solidifies its position in the tech industry and gaming market.

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VoM News Desk

VoM News is an online web portal in jammu Kashmir offers regional, National & global news.