Microsoft, Google Beat Earnings Expectations Amid AI Frenzy

San Francisco, (UrduPoint / Pakistan Point News - 26th Jul, 2023 ) :Tech titans Google and microsoft announced better-than-expected earnings on Tuesday as the frenzy over artificial intelligence stokes investor excitement and breathes a new life into the sector.

The release of ChatGPT last year landed as technology giants were embarking on major layoffs and cost-cutting plans, with share prices hammered after flying high during the coronavirus pandemic.

For the second consecutive quarter, Microsoft has more than reversed the trend, seeing profits and sales soaring to the highest levels ever for the 48-year-old company co-founded by Bill Gates.

An earnings statement reported that net profit for Microsoft was $20.1 billion in the April to June period, up 20 percent year-on-year and above expectations.

The company posted $56.2 billion in sales, which also beat expectations, though the growth slowed from the previous quarter.

And even though its share price slipped in after-hours trading, the Windows-maker remains the world's second most valuable company after Apple, with a market capitalization of $2.6 trillion.

Once again, business in the latest quarter was driven by the cloud, which relies heavily on artificial intelligence and accounts for more than half of the company's sales.

Cloud sales grew by 21 percent year-on-year.

Microsoft shares lifted off last week when the company said it would charge $30 extra per user to turbocharge its Microsoft 365 product -- which includes Word, Excel and Teams -- with AI powers.

"Every customer I speak with is asking not only how, but how fast they can apply next generation AI to address the biggest opportunities and challenges they face and to do so safely and responsibly," said Microsoft CEO Satya Nadella.

Google parent Alphabet on Tuesday also reported profits that beat market forecasts as digital advertising revenue revived and its cloud business grew.

The search engine giant reported net income of $18.7 billion on revenue of $74.6 billion in the recently ended quarter.

"There's exciting momentum across our products and the company, which drove strong results this quarter," Alphabet chief executive Sundar Pichai said in an earnings release.

Alphabet shares jumped more than six percent to $129.57 in after-market trades following the results.

Microsoft saw its share price slip more than three percent to $337.99 as earnings showed it will take a bit of time and investment to fulfill its AI visions.

"I think people got overly excited by AI, but now the reality is that it is not going to be instant," said independent analyst Rob Enderle of Enderle Group.

"We are talking a few years before the full benefit starts to materialize."