Microsoft, Google reap profits as AI demand surges

Microsoft and Google announce strong financial results on Tuesday, citing the rise in demand for artificial intelligence services as the main driver of growth

Microsoft and Google both reported strong financial results, attributing the growth to increased demand for artificial intelligence services.

The tech giants have heavily invested in generative AI, leading to heightened revenue in their cloud computing divisions as clients seek powerful and costly computing capabilities that drive the technology. 

Microsoft has been the most aggressive player in the AI space, investing in OpenAI, the creator of ChatGPT, and integrating AI across its products. The company’s sales surged to $62 billion for the October to December period, surpassing analysts’ expectations and propelling it past Apple as the world’s most valuable company. 

Microsoft’s Azure cloud services revenue rose by 30% in the period, driven by the increased computing needs associated with AI adoption.

Overall, the company’s cloud services sales increased by 24%. 

Google also attributed its profit growth to AI, with strong contributions from YouTube and its cloud computing unit. While ad revenue remains a significant driver, Google’s cloud-computing business saw a 26% increase in sales, positioning the company as a major AI provider. 

Despite trailing behind Microsoft and Amazon’s AWS in cloud computing, Google has been enhancing its products with AI capabilities, including its search engine, Gmail, and other tools.

Alphabet’s CEO highlighted the company’s newly developed Gemini AI model, which is expected to bring new capabilities across all products. 

Source: AFP