Microsoft’s AI Sales Surge, While Google’s Cloud Growth Slows

Microsoft and Google, two tech giants, have recently reported sales increases in their last quarter. However, the market’s response to their performance has been mixed, primarily due to differences in the cloud sector. While Microsoft’s stock price rose by 3%, Google’s parent company, Alphabet, saw a decline of 5.7%.

According to Reuters, Microsoft exceeded market expectations with their latest earnings announcement. The company recorded sales of $56.5 billion in the months from July to September, marking a 13% increase from the previous quarter. These figures surpassed the estimated sales of $54.62 billion. Notably, Microsoft’s intelligent cloud sector, which includes Azure’s Open AI services, was valued at $24.3 billion, outperforming the market estimate of $23.49 billion.

Although Microsoft did not disclose specific profits from AI, industry experts believe that AI products played a significant role in driving sales and contributing to overall growth. Jesse Cohen, a senior analyst at Investing.com, stated, “These results show that AI products are driving sales and are already contributing to top and bottom line growth.”

Following the positive news, Microsoft’s stock price experienced a 3% increase, aligning with market expectations.

Google also achieved a favorable performance in the past quarter. The company’s advertising sector recorded sales of $59.65 billion and net profit of $19.69 billion, surpassing the figures from the same period last year ($54.48 billion in sales and $13.91 billion in net profit).

However, the cloud division raised concerns. While the sector generated a profit of $266 million, its sales growth slowed from 28% to 22.5%. This marks the lowest growth rate recorded in the past 10 quarters.

The underwhelming performance of the cloud sector triggered a significant drop in Google’s stock price and led to a series of questions during the conference call. Market observers were particularly interested in when Google would start monetizing its generative AI, which is being tested for integration into their core search.

Alphabet CEO Sundar Pichai, however, remained tight-lipped about specific plans and focused on highlighting the positive prospects and test results of AI.

Further details revealed that Google’s spending in the third quarter increased to $8 billion, primarily attributed to the construction of AI computers and related infrastructure.

In conclusion, both Microsoft and Google experienced sales growth in their recent quarter, with Microsoft surpassing market expectations. While Microsoft has been successful in leveraging open AI services to boost their cloud division, Google is still in the testing phase of integrating generative AI into their search. The market response reflects the contrasting performance in the cloud sector for both companies.

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Microsoft (MS) and Google recorded sales increases last quarter. However, market responses were very mixed due to differences in the cloud sector. Microsoft’s stock price rose 3%, but Google’s parent company, Alphabet, fell 5.7%.

Reuters reported on the 24th (local time) that Microsoft delivered a performance that exceeded market expectations through its last quarter earnings announcement. Google also increased sales and net profit compared to the same period last year.

According to this, Microsoft’s sales from July to September recorded $56.5 billion (about 76 trillion won), an increase of 13% from the previous quarter. This figure exceeds market expectations of $54.62 billion. In particular, the intelligent cloud sector, including Azure’s Open AI services, was found to be worth $24.3 billion (about 32.7 trillion won), which is more than the market estimate of $23.49 trillion.

Microsoft did not specifically disclose profits from AI. However, Jesse Cohen, senior analyst at Investing.com, said, “These results show that AI products are driving sales and are already contributing to top and bottom line growth.”

On this day, Microsoft’s stock price increased by 3%, reflecting market expectations.

Google also achieved good results. Specifically, the advertising sector recorded sales of $59.65 billion (about KRW 80 trillion) and net profit of $19.69 billion (about KRW 26.5 trillion), compared to the same period last year (sales of $54.48 billion, net profit of $13.91 billion). Everyone outdid him.

However, the cloud part was a sticking point. Cloud made a profit of $266 million (about 358 billion won), but sales growth slowed from 28% to 22.5%. This is the lowest growth rate recorded in the last 10 quarters.

Because of this, not only did the stock price drop significantly, but there were a series of related questions during the conference call. In particular, while MS is achieving good results in the cloud by using open AI services, Google is in the process of testing to introduce generative AI to search, which is its core, so the key question was “when will they start doing money with AI?”.

However, Alphabet CEO Sundar Pichai only stated his principled position, such as “AI will bring new opportunities” and “test results are positive,” but remained silent about specific plans.

In addition, it was revealed that spending in the third quarter increased to $ 8 billion (about 10.8 trillion won), which was mainly due to the construction of AI computers and related infrastructure.

Correspondent Lim Da-jun ydj@aitimes.com

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