Microsoft and Google outperform market expectations in the first quarter

Microsoft is working quickly to integrate ChatGPT’s technology into its Word, Excel, and PowerPoint productivity suites.In a sign that the dominant search engine company is regaining its footing, Google parent company Alphabet reported a net profit of $15 billion (roughly Rs. 1,23,000 crore) in the first quarter of 2023, exceeding market expectations.

The tech giant is under pressure as a result of a general slowdown in advertising spending, overstaffing during the Covid boom, and a significant artificial intelligence challenge from Microsoft.

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In the same three-month period that the company announced it would lay off 12,000 employees, or six percent of its workforce, its quarterly revenue came in at nearly $70 billion (roughly Rs. 5,73,700 crore), exceeding analysts’ expectations by $1 billion.

On Tuesday, Microsoft’s results for the first three months of the year pleased investors, helped by its industry-leading business cloud products.

Bill Gates’ company reported a profit of $18.3 billion (approximately Rs. 15,000 crore) on revenue of $52.9 billion (approximately Rs. 4,33,500 crore), as Cloud and AI more than offset drops in revenue from licencing Windows software to computer makers, as sales in that market suffer.

The majority of market attention was focused on Google, which became a source of concern after the Microsoft-backed ChatGPT was released and quickly went viral late last year. Microsoft has integrated the technology into its Bing search engine and office software.

According to media reports, the search giant has since hurriedly released Bard, its own version of the language-based AI, but the rollout was viewed as awkward and has thus far disappointed outsiders and business insiders.

Google CEO Sundar Pichai said during an earnings call that the company would “continue to incorporate generative AI advances to make search better in a thoughtful and deliberate way.”

And because we are aware that billions of people rely on Google to deliver accurate information, we will test and refine as we go.

It is anticipated that an AI arms race will last for several years and cost the tech oligopolies money.

Google has reorganised its AI division, moving the independently operated Deep Mind subsidiary inside the company to a division called Google Brain, in an effort to get ready for the coming AI wars.

serious difficulties

The danger posed by an AI-enhanced Recently, Bing sent Pichai on a rare US media tour to reassure the public that the company remained a market leader in every area, including search, maps, and AI innovation.

Despite difficulties, Pichai received a total compensation package in 2022 that was worth more than $225 million (roughly Rs. 1,800 crore), according to a regulatory filing that was published last week.

For the third consecutive quarter, advertising revenue on Google-owned YouTube fell. Although a YouTube Shorts section was added to compete with TikTok, there was “strong watchtime growth” there.

Susan Wojcicki, the head of YouTube, retired after nine years in charge, and was succeeded by veteran executive Neal Mohan.

According to Insider Intelligence senior analyst Max Willens, “Google exceeded both revenue and earnings expectations this quarter, but reasons for investor optimism are modest.”

“Google’s core business is facing the most significant obstacles it has faced in a while.”

Despite difficulties, Alphabet’s share price has increased significantly since the lows before the announcement of layoffs in January. On Tuesday, it increased by more than 4 percent in after-hours trading to $108.4 (roughly Rs. 9,000).

This was still far below the close to $150 (approximately Rs. 12,300) that was seen in 2021, when advertising revenue was booming.

Microsoft has continued to advance its AI revolution, recently announcing that it would integrate ChatGPT’s capabilities into its venerable Excel, Word, and Outlook programmes.

Despite early issues such as chatbots providing disturbing responses or blatantly inaccurate information, the Redmond, Washington-based behemoth has been quick to adopt language-based AI, showing less caution than its competitors.

“We see that when people use the new AI features, their engagement with Bing and Edge goes up,” Microsoft CEO Satya Nadella said during an earnings call.