Microsoft Corp. and Alphabet Inc. have demonstrated the profitability of their investments in Artificial Intelligence and cloud computing, surpassing Wall Street’s financial forecasts.
With their latest quarterly results showing a sharp increase in cloud revenue driven by AI, shares of both companies saw significant gains, with Alphabet’s stock rising 12% and Microsoft’s by 4%.
The rivalry between these tech giants has intensified as they vie for dominance in AI technology. Microsoft’s collaboration with OpenAI, aimed at enhancing its cloud services and competing with Google’s search capabilities, has marked a new phase in this competition.
A critic tweeted about these high investments, saying:
As expected, AI is fueling the demand for cloud computing.https://t.co/hDVlJLjeXb
— Mohd Atasha (@mohdatasha) April 26, 2024
Both companies have seen their cloud computing divisions thrive, thanks in part to the adoption of generative AI technologies, which are being used to create texts, images, and videos from simple prompts.
This technology has not only attracted new business clients but also bolstered long-term investment in cloud infrastructure.
Alphabet’s cloud services have particularly stood out, turning a profit for the first time with earnings well above expectations. This achievement has helped shift perceptions of Google Cloud from being a weaker segment to becoming a key growth driver for Alphabet.
Here’s what a Reddit user has got to say:
Microsoft has also seen robust growth in its Azure cloud platform, with AI contributing significantly to a 31% increase in sales.
This growth is supported by the integration of AI across Microsoft’s product range, including a new AI assistant for Office software, which is quickly gaining popularity among large corporations.
Despite these successes, not all tech companies reported positive news. Intel Corp. shared a bleak outlook for the upcoming quarter, which contrasted sharply with the optimistic forecasts from Microsoft and Alphabet.
As the tech landscape continues to evolve with AI and cloud computing at the forefront, Microsoft and Alphabet are well-positioned to continue their growth and remain leaders in the industry.
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