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Title: Google, Microsoft Are Spending Massively on AI, Quarterly Earnings
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Link: https://tech.slashdot.org/story/24/11/18/0022...

This week Alphabet CEO Sundar Picahi assured investors that their long-term
AI focus and investment (and a "commitment to innovation" "are paying off,"
reports the Associated Press. Alphabet's stock has already soared 20% this
year, and it's "still thriving" as the company "navigates through a pivotal
shift to AI and battles regulators..." Alphabet earned $26.3 billion, or
$2.12 per share during the most recent quarter, a 34% increase from a year
ago. Revenue rose 15% from the same time last year to $88.27 billion... The
profits would have been even higher if Google wasn't pouring so much money
into building up its AI arsenal in a technological arms race that includes
other industry heavyweights Microsoft, Amazon, Apple, Facebook parent Meta
Platforms and rising star OpenAI. The AI investments are the primary reason
Google's capital expenditures in the past quarter soared 62% from the same
time last year to $13.1 billion. The AI spending will likely stay at roughly
the same level during the current October-December period, and the rise even
higher next year, according to Anat Ashkenazi, Alphabet's chief financial
officer. But Ashkenazi also emphasized the Mountain View, California, company
will act on cost-cutting opportunities in other areas to help boost profits.
Alphabet already has trimmed its payroll from more than 190,000 worldwide
employees early last year to about 181,000 workers now. In an example of how
AI can perform tasks that once required human brainpower, Pichai said the
technology is now writing more than 25% of the company's new computer coding.
After the results, investors sent Alphabet's stock price up 5% in extended
trading, the article points out. "Both Alphabet's profit and revenue
increased at a brisker pace than industry analysts anticipated, thanks
primarily to a moneymaking machine powered by Google's ubiquitous search
engine... [Google's digital search-engine ads earned $49.39 billion, 12% more
than the same quarter of 2023.] And Google's cloud division is growing at an
even more robust rate, thanks to demand for AI services. The cloud division
generated $11.35 billion in revenue during the past quarter, a 35% increase
from last year." And meanwhile over at Microsoft, quarterly sales surged 16%
to $65.6 billion, reports the Associated Press. But again, "the company
sought to assure investors its huge spending on artificial intelligence is
paying off." The company has spent billions of dollars to expand its global
network of data centers and other physical infrastructure required to develop
AI technology... As a result, AI-related products are now on track to
contribute about $10 billion to the company's annual revenue, the "fastest
business in our history to reach this milestone," CEO Satya Nadella said on a
call with analysts Wednesday. [Though Microsoft "hasn't yet formally reported
revenue specifically from AI products," the article notes later, with
Microsoft instead saying it's infused AI and Copilot into all its business
segments.] Just in the last quarter, Microsoft spent $20 billion "mostly for
its cloud computing and AI needs," the article points out. But there's still
making plenty of money... The software maker also reported an 11% increase in
quarterly profit to $24.7 billion, or $3.30 per share, which beat Wall Street
expectations for the July-September period... Leading in sales for the
quarter was Microsoft's productivity business segment, which includes its
Office suite of email and other workplace products, growing 12% to $28.3
billion. Microsoft's cloud-focused business segment grew 20% from the same
time last year to $24.1 billion for the three months ending Sept. 30. Its
personal computing business, led by its Windows division, grew 17% to $13.2
billion. A big part of that growth came from Microsoft's Xbox video game
business, which was boosted by its purchase of game publishing giant
Activision Blizzard a year ago.

Read more of this story at Slashdot.

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