Google and Microsoft are combative with AI – and continue to make billions in profits

The hype surrounding the text bot ChatGPT is once again drawing attention to the otherwise often monotonous quarterly figures of tech heavyweights such as Google or Microsoft. Where are you actually in the development and implementation of artificial intelligence?

Microsoft and Google are now trying to convey this question with different messages.

In short, both tech giants are on their way to competing in artificial intelligence (AI) with profits in the billions from their core businesses. Microsoft wants to play a leading role and is prepared to invest in it, emphasized CFO Amy Hood after the presentation of the current quarterly figures. Google CEO Sundar Pichai promised users better web searches thanks to AI, among other things, But downplayed the magnitude of the change.

Last year, the release of the text bot ChatGPT caused a stir in the tech industry. Not only can ChatGPT formulate sentences that are indistinguishable from a human’s. The software can also answer questions, summarize texts – or write new texts, such as screenplays. At the same time, ChatGPT’s texts are not particularly original – in fact, they are often incorrect in terms of content. This is partly due to the way the program works: It collects huge amounts of data and uses it to estimate word for word how a sentence should probably continue.

Microsoft has already responded and made a pact with ChatGPT developer OpenAI. The company’s software is already integrated into the tech giant’s products, including in the cloud. Among other things, the Windows group hopes to break Google’s long-standing dominance of Internet searches. Microsoft boss Satya Nadella spoke about it Wednesday evening generation change in the shop.

Google is gradually expanding its own application – and relying on Bard

Google executives, on the other hand, were particularly relaxed about the change artificial intelligence was bringing about. Web search has changed a lot over the years, says Sundar Pichai, CEO of Google and Alphabet. Google will be guided by the wishes of users and its own quality standards. Artificial intelligence is already being used in many of the group’s offerings. The use of the in-house answer to ChatGPT called Bard will gradually be expanded.

Despite all the AI ​​hype, both tech heavyweights still depended on their traditional business areas last quarter. Microsoft benefited from demand for software and cloud services. Google clearly felt the cooling of the online advertising market.

The Internet group’s advertising revenue fell slightly year-on-year. At the same time, austerity measures such as cutting thousands of jobs related to severance payments and giving up office space cost parent company Alphabet $ 2.6 billion because the effect of the savings does not take effect until later.

In the core business of advertising related to web searches, revenue was up 1.8 percent to $40.36 billion. YouTube’s ad revenue fell from $6.87 billion to $6.69 billion. It was the third consecutive quarterly decline for the video platform. However, according to Chief Financial Officer Ruth Porat, things have stabilized recently.

Turnover increase thanks to cloud business

In the cloud business, on the other hand, revenues rose sharply from $ 5.82 to $ 7.45 billion – and the division was also profitable for the first time with an operating profit of $ 191 million.

Thanks to growth in the cloud business, Alphabet’s consolidated revenue increased 2.6 percent to USD 68 billion (approximately CHF 62 billion). These are not the growth rates that investors used to be accustomed to. The stock rose about 1.5 percent in after-hours trading after Alphabet announced a share buyback of up to $70 billion.

The bottom line is that Alphabet posted a quarterly profit of a whopping $15 billion, as the group announced on Tuesday. That was 8.4 percent less than one year previously.

Microsoft, on the other hand, increased its quarterly profit by nine percent to $18.3 billion. Sales rose seven percent to $52.9 billion. In particular, the cloud business around the Azure platform, which sells companies computing capacity and applications on the Internet, continued to grow with a turnover increase of 27 percent. Azure will continue to drive growth in the current quarter, said CFO Hood. The figures clearly exceeded market expectations. Investors allowed the share to rise 8.5 percent in aftermarket trading.

(yam/sda/dpa)