Tech Giants Are Raking in Cash With AI Investments

Big bets on artificial intelligence are paying off.

Microsoft is out with its new quarterly numbers, and those figures are robust.

According to the company, Microsoft reported a whopping $62 billion in sales for the quarter ending December 31, 2023. That’s an 18% rise on a year-to-year basis.

There’s more.

On Thursday, January 25, Microsoft became the second company ever to be valued at more than $3 trillion (its market cap sits at $3.04 trillion on February 1). Apple first crested the $3 trillion mark last June.

What’s driving the big numbers? Company chief financial officer Amy Hood attributes the revenue growth to Microsoft’s massive investment in artificial intelligence.

Microsoft’s reported $13 billion ongoing investment in Open AI has been “a real pivot of our investment infrastructure,” CFO Amy Hood said during the company’s earnings call on January 30. “The tech stack we’re building, no matter what team [it] is on, is inclusive of AI enablement.”

The company’s Open AI investment has allowed it to merge its new partner’s AI technology into its Azure cloud computing software products and its GitHub CoPilot AI application, which developers can use to design their own artificial intelligence products and services. Microsoft already has 1.3 million CoPilot subscribers, the company reported – that’s a 30% subscriber boost on a quarterly basis.

The company also noted a 24% rise in cloud computing revenues, up to $33 billion for the most recent quarter. Hood says that’s largely attributed to Microsoft’s AI investment, as well.

“Our commitment to scaling our cloud and AI investment is guided by customer demand and a substantial market opportunity,” she said. “(We’re focusing) on execution, so our customers can realize the benefits of AI productivity gains as we invest to lead this AI platform wave.”

Google Cashing In Amidst Layoffs

Microsoft is hardly alone in attributing large revenue gains to AI funding.

Fellow tech giant Google reported $9.2 billion growth in its fourth-quarter earnings, a 27% revenue rise on a year-to-year basis.

Company CEO Sundar Pichai says Google’s cloud, web search, and YouTube components “are already benefiting from our AI investments and innovation,” CEO Sundar Pichai said in a statement.

Google has already invested $2 billion into Open AI competitor Anthropic, and it’s planning on pouring more money into artificial intelligence even as it laid off 12,000 staffers recently.

“(We plan) to remove layers [of its workforce]” in 2024 to free up funds for “investing in big priorities” Pichai stated in a recent memo to employees.

Look for more AI investments from both companies (and more layoffs, too) in 2024. Finding more room for technology funding should be a big deal going forward for the major technology companies.

It may not be good news for employees handed a pink slip – but that’s the new reality in 2024.

Microsoft stock is down -1.80% for the week, although it’s up over 50% over the last year.

Google stock is down -7.71% over the past five days, but is up 30.33% for the past year.





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