Microsoft sales jump in AI arms race against Google
London | Sales at Microsoft have surged as the technology giant cashes in on the artificial intelligence gold rush in a race against Silicon Valley rival Google.
Revenues at Microsoft jumped 13 per cent to $US56.5 billion ($89 billion) as chief executive Satya Nadella claimed the company was “making the age of AI real”.
Profits at the tech giant climbed 27 per cent to $US22.3 billion in the three months ending in September. Bloomberg
The technology company has invested in ChatGPT developer OpenAI and launched a series of AI-powered tools for its Office and Word products recently.
Sales at its cloud internet arm, which underpin the artificial intelligence efforts, were up 24 per cent. Profits at the tech giant climbed 27 per cent to $US22.3 billion in the three months ending in September.
Mr Nadella is revamping the company’s entire product suite, including Office, Windows, search and security software, to add features based on OpenAI technology. The partnership has helped Microsoft lure corporate customers keen to use ChatGPT and other new technologies — which answer questions and generate content — in their own applications.
The company, which already counts most businesses as clients of its productivity tools and operating systems, has also been testing a pricier, AI-enhanced version of its Office software.
“Enterprise software within tech is probably one of the best spaces now and Microsoft looks pretty strong,” said Dan Morgan, senior portfolio manager at Synovus Trust.
It was a more mixed picture for rival Google, which is also seeking to capitalise on surging demand for AI technology.
Revenues climbed 11 per cent to $US76.7 billion with net income of $US19.7 billion on the back of a recovery in digital advertising revenues.
However, its closely watched cloud division, which houses its data storage business and many of its AI efforts, missed Wall Street expectations.
Fears of a slowing global economy have prompted companies to curb spending on cloud-related services, including expensive AI tools, which has slowed revenue growth at Google’s cloud unit to 22.5 per cent in the third quarter, from 28 per cent in the prior three-month period.
Shares in Microsoft climbed 5 per cent in after-hours US trading, while shares in Alphabet, Google’s parent company, fell 6 per cent.
Alphabet chief executive Sundar Pichai said the company was focused on “making AI more helpful for everyone”.
Tech sector bellwether
Google and Microsoft have been rapidly adding AI technology to their products as customers race to adopt the new technology.
Collectively worth more than $US4 trillion, the results for Microsoft and Google will be seen by investors as a bellwether for the state of the US technology sector and the appetite for further spending on artificial intelligence.
The tech results come before results from Facebook owner Meta on Wednesday (Thursday AEDT) and Amazon on Thursday.
Earlier this year, Microsoft announced a deal with OpenAI, which will reportedly involve it investing up to $US10 billion in the fledgling technology company.
As part of the deal, Microsoft has been embedding OpenAI’s chatbot technology, which can provide human-like responses to questions asked in plain English, into its many of its products including search engine Bing.
Although the company’s cloud divisions have traditionally been focused on data storage and management, increasingly they are using them to sell AI tools to customers.
Google, meanwhile, has been rapidly adding new AI tools to its Google Cloud internet infrastructure offering, while it has also launched a chatbot called Bard and added a host of AI photography tools to its Pixel smartphones.
So far this year, both companies have shed thousands of jobs as the tech sector cuts costs in a bid to boost profitability.
Bloomberg and The Telegraph London
Introducing your Newsfeed
Follow the topics, people and companies that matter to you.
Find out moreRead More
Latest In Middle East
Fetching latest articles