Microsoft and Alphabet see profits grow due to increasing demand for AI
Quarterly reports for Microsoft and Google parent company Alphabet released this week showed decent growth for both companies, attributable mainly to the explosion of artificial intelligence (AI) and the storage it requires.
With all the major tech companies now engaging with AI, we are in a race to see who can take the most advantage of growing user demand. Microsoft and Alphabet are already doing well and have the numbers to prove it.
Microsoft managed a year-on-year profit of $56.5 billion compared with Alphabet’s $80.5 billion – an increase of 13% and 15%, respectively over the same period in 2023.
Experts say this can be explained by the huge demand for cloud storage to provide enough space for AI solutions. Lee Sustar, analyst at Forrester Research, said this was a huge win for Alphabet. “For years, Google Cloud was a weak point during Alphabet’s quarterly results. These latest results show that Google Cloud’s AI offerings have not only prompted enterprise customers to reconsider, but also made them spend serious money,” he told news agency Bloomberg.
Microsoft also saw sales of its cloud storage platform Azure increase, by a whopping 31%. According to the company, 7% of that was directly due to AI applications, compared to 6% in the previous quarter.
It’s an endorsement for Microsoft CEO Satya Nadella, who wants to remain firmly committed to AI in order to compete. One way Microsoft is doing this is by investing in OpenAI, the company behind ChatGPT. At the same time, it also wants to get started with its own applications, something that seems to be working.
Nadella says that nearly 60% of leading Fortune 500 companies use the AI assistant Copilot. This provides companies with practical help in preparing documents or presentations for $30 a month. Among a test audience, reactions to Copilot were mixed, but that has seemingly been reversed.
Alphabet may also benefit from the growing interest in its Gemini large language model, despite earlier controversy over image generation.
Alphabet also reported good revenues from Search and YouTube, showing potential for life after AI should their efforts fail.
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