(San Francisco) Alphabet (Google) and Microsoft achieved results significantly above expectations for the period from July to September 2023, but the market was especially interested in their performance in the cloud (cloud computing), a major area of deployment generative artificial intelligence.
Driven by the rebound in advertising, Alphabet achieved nearly $77 billion in turnover in the third quarter, up 11% year-on-year, according to its results release published Tuesday.
The Californian group generated almost 20 billion in net profit, a jump of 42% in one year for the profits of Google’s parent company, and more than a billion above analysts’ forecasts.
Microsoft, which has just finalized the acquisition of Activision Blizzard video game studios (Call of Duty, Candy Crush), is not left out with $56.5 billion in revenue (+13% over one year) for its first financial quarter.
Its net profit came to 22.3 billion, up 27%, also higher than expectations.
The Redmond, Washington, company saw its cloud growth accelerate to 24%. The Azure platform, Microsoft’s flagship in the cloud, and other associated services, expanded even more rapidly, with growth of 29%.
Its title gained nearly 4% on Wall Street during electronic trading after the close of the New York Stock Exchange.
The performance of the cloud activities of the giants of the sector (Amazon and Microsoft in the lead, followed by Google) is scrutinized by the market, which sees it as a sign of the appetite of organizations for the latest wave of artificial intelligence (AI).
Generative AI
Google’s cloud business disappointed with $8.4 billion in revenue in the third quarter (+22% year-on-year), of which it nevertheless generated an operating profit of $266 million, instead of a loss of 440 million in the same period last year.
“Google faces strong competition in the cloud,” commented Insider Intelligence analyst Max Willens.
The internet giant’s remote computing services have won over many start-ups specializing in AI, and “this will bear fruit over time, but for the moment it is not enough to satisfy investors “, he detailed.
Alphabet’s stock lost more than 6% on Wall Street during electronic trading after the close of the New York Stock Exchange.
For Dan Ives, generative AI, which makes it possible to produce texts, images, computer code and sounds upon simple request in everyday language, constitutes the “biggest technological revolution of the last 30 years”.
“Use cases are accelerating,” believes the Wedbush expert. “The impact of this AI cycle on the consumer internet will be massive and will start with the cloud branches.”
The technology has monopolized the conference calls of Google and Microsoft, which are leading the generative AI race with the addition of many new tools to their respective search engines and online services.
Historic trial
“More than half of the generative AI start-ups that have raised funds are Google Cloud customers,” said Sundar Pichai, the boss of Alphabet.
“Our Vertex AI platform helps our customers create and deploy AI-powered applications at scale,” he continued. “Between the second and third quarters, the number of generative AI projects underway on Vertex AI increased sevenfold.”
The executive also discussed the integration of the latest generation of AI into automated ad design, tools for creators on YouTube and the new personalized assistant “capable of reasoning”.
Satya Nadella, the boss of Microsoft, also expanded on the capabilities of Azure, boosted by the language models of OpenAI, the start-up that launched this technological wave with ChatGPT, almost a year ago .
“More than 18,000 organizations now use OpenAI tools built into Azure,” he said.
The two firms have been facing each other in Washington as part of the historic trial of the United States against Google since mid-September.
Satya Nadella testified in support of the US government, which accuses Google of building its empire on illegal contracts with Samsung, Apple and other companies to have its search engine installed by default on their products.
It is the largest antitrust lawsuit filed in the United States against a major technology company since that against Microsoft and its Windows operating system more than twenty years ago.