AI
Google and Microsoft bolster their AI finances
Record high in investments: Core businesses are performing excellently and driving massive capital deployment forward.
Record spending on investments in the expansion of artificial intelligence leaves its mark on the quarterly reports of Google and Microsoft. While both tech giants were able to record a significant increase in their revenues, the record spending on capital investments reflects the high costs of the AI race.
Microsoft spent $14 billion on investments in the last quarter alone, which is more than the company invested in an entire year just five years ago. Spending at Google parent Alphabet nearly doubled to $12 billion compared to the same quarter last year.
Despite These Massive Investments, Shares of Both Companies Rose Following the Announcement of Quarterly Reports. In Contrast, Meta Platforms, the Parent Company of Facebook and Instagram, Lost More Than 10% of Its Market Value. Investors Reacted with Disappointment to the Rather Conservative Revenue Projections for the Second Quarter, Even Though Meta Also Significantly Increased Its Investments in the Expansion of AI.
Alphabet's Quarterly Report Stands Out Remarkably. With revenue of 80.5 billion US dollars, surpassing Wall Street's expectations, and an operating margin of almost 32%, the company achieved its highest value in nearly three years. Additionally, Alphabet announced a share buyback program of 70 billion US dollars and paid out a dividend for the first time, which further boosted investors' confidence.
Microsoft Also Impresses with Its Quarterly Figures. Revenue and Operating Income Exceed Wall Street Expectations. Particularly Encouraging Was the 31% Increase in Cloud Computing Sales, Which Was Two Percentage Points Above Analysts' Forecasts. Despite Increased Investments in AI, Microsoft Expects Another Year of Double-Digit Revenue and Profit Growth in the Next Fiscal Year.
Nevertheless, investors' reactions to Meta Platforms show that investments in artificial intelligence are closely monitored and have their limits. Investors are paying close attention to plans for future spending. Both Alphabet and Microsoft announced they would continue to increase their spending, suggesting that the AI race is far from over.
