The tech giant Microsoft and Google parent Alphabet have achieved record sales. Microsoft in particular benefited from the hype surrounding artificial intelligence. But the numbers fell short of expectations.
Microsoft’s cloud businesses benefited primarily from applications with artificial intelligence in the fourth quarter of 2023. Of the 30 percent growth in the Azure cloud platform, around a fifth was due to AI applications, as CFO Amy Hood said on Tuesday.
Microsoft had made a pact with ChatGPT developer OpenAI and is integrating AI assistants into its software across the board. User interest also drives the need for the cloud infrastructure behind it.
Sales and profits increased at Microsoft
At Microsoft, business figures rose significantly in the last quarter, as can be seen from the figures presented yesterday after the US stock market closed. Sales rose by almost a fifth to $62 billion. Profits rose by a third to almost $22 billion.
However, analysts had expected slightly higher cloud revenues. The recently good stock fell slightly in after-hours trading. With a market value of more than three trillion dollars, Microsoft is the most valuable company in the world. AI euphoria also plays a big role.
Improve search engine with AI
Google parent Alphabet also presented its current business figures yesterday. As with Microsoft, observers on Wall Street were particularly excited about the AI effects. Google has dominated the web search business for years. Advertising in the search results area is by far the Internet giant’s most important source of money.
Google wants to improve its search engine with AI functions. Rivals like Microsoft and start-up challengers, on the other hand, are targeting the company’s search dominance and want to use AI to provide more direct answers instead of a list of links.
Growth in Google’s advertising business
The business figures for the last quarter showed significant growth in Google’s advertising business. But sales fell short of expectations. Google’s advertising revenue increased by eleven percent year-on-year to 65.5 billion dollars (60.4 billion euros). Analysts on average had expected $65.8 billion. This slightly negative factor was enough to cause the shares to fall by almost six percent in after-hours US trading.
In the all-important advertising alone, sales rose from $42.6 to $48 billion in the last quarter. The video subsidiary YouTube increased advertising revenue from almost eight to 9.2 billion dollars. Overall, Alphabet sales grew by 13 percent to $86.3 billion in the last quarter and profits jumped by 52 percent to around $20.7 billion.
The three most important areas of Google search, YouTube and the cloud business are already benefiting from their own AI investments, explained Alphabet CFO Ruth Porat. Among other things, the company increasingly used its chatbot Bard. But the best is yet to come, thanks to the large language models called Gemini that the Alphabet subsidiary Deepmind is developing, says Porat.