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If the hype around AI is indeed petering out, you wouldn’t know it from the earnings calls of two of the technology’s chief peddlers this week—though a frontrunner may be emerging.
Microsoft and Google once again leaned heavily into their respective generative AI pushes as they delivered overall strong results in reports this week. Executives and analysts peppered Alphabet’s call with 74 mentions of “AI” this quarter (down from 90 last quarter), as Microsoft racked up 58 name-checks (down from around 70).
While both companies affirmed their abiding enthusiasm for AI, Microsoft seemed to be the clear winner of the day in the eyes of Wall Street. The tech giant posted better-than-expected earnings, with a bright spot being a 24% YoY jump in its cloud business, which includes Microsoft’s Azure OpenAI services.
Meanwhile, clouds hung over Google parent Alphabet’s strong core advertising revenue posting in the form of, well, the cloud. The company’s stock took a significant dive in the hours after the call as its cloud business, which includes many of its AI services, logged its slowest growth in 11 quarters, according to Reuters.
Money-making AI: Microsoft’s strong cloud results may have helped it put to bed some swirling investor worries over how expensive AI investments might actually pay off. Microsoft has woven technology from OpenAI, which it heavily backs, throughout much of its Azure cloud platform, and it now offers client companies a range of AI tools within it.
Microsoft is also poised to release its AI-powered Copilot assistant within its business software next week.
“With Copilot, we are making the age of AI real for people and businesses everywhere,” Microsoft CEO Satya Nadella said on the call. “We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.”
Cloudy outlook: Although Alphabet posted a 22% increase in its own cloud business, investors seemed to be dismayed by the general slowing growth as the company continues to spend heavily on generative AI tools that live on the cloud. Google’s AI investments have included chatbot-like features within its search engine, email and writing assistant tools on its platforms, and Bard, its ChatGPT competitor.
Google CEO Sundar Pichai said in the call that Google remains committed to backing its AI business in hopes that the tech will become more resource-efficient as it scales upward.
“We’ll do everything that is needed to make sure we have the leading AI models and infrastructure in the world, bar none. And we will continue driving efficiencies from there,” Pichai said.