Double-digit profit increases have been disclosed by Google and Microsoft, which supports the reasoning behind their large investments in artificial intelligence (AI).
After-hours trading saw an 11% increase in Google’s shares and a 4% increase in Microsoft’s shares after both companies’ quarterly earnings, which were revealed on Thursday, surpassed estimates.
Alphabet reported a $23.7 billion profit for the first quarter of this year, a significant increase of 57 percent. The giant of Silicon Valley also announced its first dividend, which will be paid at $0.20 per share. Google CEO Sundar Pichai credited the company’s strong financial results to Gemini, the AI text-to-image algorithm.
“Pichai pointed out, ‘Our forefront presence in AI research and infrastructure, coupled with our expansive global product reach, places us in a strong position for the forthcoming surge of AI innovation.'”
After a 20 percent gain, Microsoft revealed a $21.93 billion quarterly profit.
The remarkable outcome comes after Facebook and Instagram owner Meta had a $200 billion decline in market capitalization on Wednesday. Following CEO Mark Zuckerberg’s warning about rising costs associated with AI investments, there was a decline.
These profits come at a time when major participants in the AI space, like Google, Microsoft, Amazon, and others, are under increased regulatory scrutiny in the US and Europe.
The US Federal Trade Commission opened an investigation in January to find out if the billion-dollar collaborations between Microsoft, Amazon, and Google and the start-ups Anthropic and OpenAI had any negative effects on competition.
The European Commission launched a probe in March to find out how the biggest digital companies manage the risks associated with artificial intelligence, including deepfakes created by computers.
