- Microsoft and Alphabet published quarterly results that exceeded Wall Street expectations.
- Their CEOs said their profits were partly thanks to their companies’ investments in AI.
- This is going to be “a golden situation for them,” Wedbush’s Dan Ives told CNBC.
Investors just got a glimpse of what the fruits of massive investments in AI could look like.
On Thursday, just after Meta’s mixed first-quarter results caused a decline on Wall Street, Microsoft and Alphabet just proved that there is money to be made through artificial intelligence.
Microsoft reported a profit of $21.9 billion for its quarter ended March 31, an increase of 20% from the last fiscal year in the same period. Google’s parent company reported a profit of $23.7 billion, an increase of 57% from the last fiscal year.
Both results exceeded analysts’ expectations, and company executives say it’s thanks to AI.
In a conference call Thursday, Alphabet CEO Sundar Pichai acknowledged that much of its first-quarter performance was due to Google’s search engine. However, the executive also made sure to highlight the contributions of Google Cloud, which now offers generative AI services through Google’s AI model, Gemini.
“In Cloud, we’ve announced more than 1,000 new products and features in the last 8 months. At Google Cloud Next, more than 300 customers and partners talked about their successes in generative AI with Google Cloud, including global brands like Bayer, Cintas, Mercedes Benz, Walmart and many others,” Pichai told investors on the call.
Ruth Porat, Alphabet’s chief financial officer, said on the call that Google’s cloud segment generated $9.6 billion in revenue, partly reflecting “a growing contribution from AI.”
Similarly, Microsoft said its latest quarter was driven by its cloud services.
According to a company press release, Microsoft generated $26.7 billion in revenue from its cloud products, including Azure. The company said 7% of its growth from Azure came from AI.
Microsoft CEO Satya Nadella’s sole statement in the press release highlights the company’s investment in artificial intelligence, namely Microsoft Copilot, which is an AI assistant for Azure.
“Microsoft Copilot and Copilot Stack are orchestrating a new era of AI transformation, driving better business outcomes across all roles and industries,” Nadella said in the press release.
Investors appeared pleased with the quarterly performances of Microsoft and Alphabet, which gave the companies a big stock market rally, as Wall Street continues to suffer from a hangover from Meta’s first-quarter report.
Wedbush analyst Dan Ives told CNBC on Thursday that the reaction was a “step change” from what Wall Street saw 24 hours ago with Meta.
“They have a goldmine of AI engineers and data, and now they’re starting to monetize it,” Ives said of Alphabet and Microsoft. It’s a “gold mine for them in terms of AI,” he added.
businessinsider
