Alphabet CEO Sundar Pichai is confident that Google will find a way to make money by selling access Innovative AI tools. Microsoft CEO Satya Nadella said His company is already doing that.
Both companies reported better-than-expected quarterly revenue and profits on Thursday. And the stock prices of both skyrocketed thanks to this result, with Alphabet even more excited thanks to its new plan to buy back more shares and issue dividends for the first time.
But the short-term fortunes of Microsoft and Google, at least with respect to their innovative AI efforts, look very different under the covers and in the comments of their executives. How investors, workers and potential customers view rivals’ competitive efforts could determine which side gets a bigger share of the hundreds of billions of dollars in spending expected to pour in. into such software in the coming years.
On a call with financial analysts Thursday, Nadella said Microsoft now has 1.8 million customers. GitHub Copilot, a general AI tool that helps engineers write software code. That’s up from 1.3 million customers a quarter ago.
Among Fortune 500 companies, 60% are using it Copilot for Microsoft Office 365a virtual assistant uses generative AI to help employees write emails and documents, and 65% are using the Microsoft Azure Cloud service that allows them to access generative AI software from ChatGPT – maker of OpenAI. “Azure has become the go-to place for almost anyone working on an AI project,” Nadella said. Microsoft has 13 billion USD Invest in OpenAI certainly helped win those customers.
Interest in AI services helped boost revenue for Microsoft’s largest unit cloud service — up 7 percentage points from a year ago, and Microsoft’s total revenue rose 17% to nearly $62 billion. USD. Nadella added that it also gained market share in the cloud. The number of $100 million cloud deals Microsoft closed increased 80% in the quarter compared to the same period a year ago, and $10 million deals doubled.
Alphabet’s Pichai also has milestones to be proud of. He told analysts on a separate call that more than 1 million developers are using Google Cloud’s generative AI tools, and 60% of investor-backed generative AI startups are Google Cloud customers. Innovative AI is also powering the advertising campaigns of Google’s advertising clients.
But Pichai did not say how many subscribers Google has attracted Gemini advanced$20 per month Enrollment plans were announced in February provides access to the company’s most advanced AI chatbot.
Regarding Google’s core business of search, Pichai did not share revenue figures related to experiments to summarize query results using synthetic AI. By providing more direct answers to searchers, Google may have fewer opportunities to show search ads if people spend less time performing additional, more refined searches. . The types of ads that Google displays may also have to change.
While Pichai said tests show that users exposed to AI-powered synthetic search are performing more searches, they are also likely to be less profitable for Google because of the technology. basically supporting more advanced searchers is more expensive than running their established systems.
Picahi expressed some concern on both fronts. “We are very, very confident that we can manage costs to meet these requirements,” he said. “I feel comfortable and confident that we can manage the monetization transition here as well. It will happen over time.”
Alphabet’s total revenue increased 15% to nearly $81 billion.
They spent about the same amount — about $12 billion — as Microsoft invested in infrastructure like servers and data centers last quarter. But Thursday’s results and comments suggest Microsoft is going further in delivering the benefits.
For now, shareholders are allowing both companies to go free. At the end of Thursday, shares of Microsoft were up 35% over the past year and Alphabet was up 51% over the past year. Both are at or near all-time highs. But if customers continue to flock to Copilot and the search outlook for Gemini and Google is less clear, the trend lines will soon diverge.
