Google and Microsoft describe AI prospects in latest earning reports

Alphabet — the parent company of Google — and Microsoft both described their artificial intelligence (AI) prospects in quarterly earnings reports on July 25.

Google calls itself an AI leader

Sundar Pichai, CEO of Google and Alphabet, said:

“Our continued leadership in AI and our excellence in engineering
and innovation are driving the next evolution of Search, and improving all our services.”

Alphabet noted that it combined its Google Research (Brain) and DeepMind groups into a single AI team called Google DeepMind earlier this year, but the firm only reported that group’s results within its broader finances. Google is otherwise attracting attention for its AI chatbot Bard, its large language model PaLM, and other AI-powered tools.

The company reported $74.6 billion in revenue for the quarter ending June 30, 2023. That total was driven largely by $66.3 billion of revenue from Google Services, a category that includes ads, Android, Chrome, search, YouTube, other services, and, previously, the aforementioned Brain category. Google Cloud, meanwhile, accounted for $8.0 billion of revenue; other categories accounted for $288 million of revenue.

Alphabet’s revenue represents a 7% change year-over-year. GOOGL stock was up 0.56% over the day and up 6.37% after hours as of 10:15 p.m. UTC on July 25. The company was widely reported as exceeding expectations.

Microsoft describes “AI platform shift”

Satya Nadella, chairman and chief executive officer of Microsoft, said:

“We remain focused on leading the new AI platform shift, helping customers use the Microsoft Cloud to get the most value out of their digital spend, and driving operating leverage.”

Prior to that statement, Nadella said that companies are asking “not only how – but how fast” they can apply AI to address new situations.

In an attached product focus document, Microsoft mentioned numerous AI applications including an AI-powered draft tool for LinkedIn, AI shopping suggestions in Bing, and support for OpenAI’s GPT and ChatGPT in Azure. Microsoft is also known for offering its Copilot AI assistant and for its investments in ChatGPT creator OpenAI. Microsoft is reportedly building an AI chip called Athena for internal use as well.

Despite its recent AI focus, Microsoft’s cloud services drove much of its revenue over the last quarter. The company saw $56.2 billion in revenue and said that this was largely driven by Microsoft Cloud, which accounted for $30.3 billion of the total. The company’s total revenue represents an 8% increase year-over-year.

Though Microsoft, like Google, exceeded expectations, its stock performed more modestly. MSFT stock was up just 1.70% over the day and down 4.33% after hours.