AI Takes a Back Seat as Core Businesses Drive Tech Giants’ Earnings: Alphabet and Meta Post Strong Results Amidst AI Hype
During the past few months, major tech companies have made substantial efforts to keep the spotlight on artificial intelligence. They’ve made product announcements, invested in infrastructure, and formed partnerships to showcase their commitment to AI. However, this earnings season, all the hype surrounding AI took a back seat. Investors rewarded or penalized these tech giants based on the health of their well-established core businesses, showing that AI is not yet the primary revenue driver for them.
Alphabet and Meta, backed by their dominant digital advertising businesses, witnessed their stock prices rise significantly after posting results. Google’s search ad revenue, comprising two-thirds of its total, exceeded analysts’ expectations, along with strong ad sales on YouTube.
Meta, on the other hand, pleased investors by predicting a return to double-digit revenue growth in the current quarter, thanks to its social media platforms’ performance. Marketers’ increased spending on Reels video ads, along with improvements in ad targeting and tracking, contributed to the positive outlook.
Microsoft’s AI Leadership Faces Investor Disappointment Amidst Slowing Azure Growth
Microsoft, despite being ahead in AI due to its investment in OpenAI and the ChatGPT bot, faced some disappointment from investors. Slowing growth in its Azure cloud business overshadowed the excitement for its AI-infused products. Although Azure’s sales represented over half of Microsoft’s $110 billion in cloud-related revenue this year, the slowing growth led to a 3.8% drop in the company’s stock after the results were published.
While all three companies claim that AI has been integral to their core businesses, providing improved search results and personalized Instagram stories, the meaningful revenue gains and stock reactions this earnings season are still primarily driven by their non-AI offerings. However, their emphasis on AI has contributed to the surge in their shares in 2023, with Microsoft up 38%, Google up 47%, and Meta more than doubling its stock value.
In other news, AI is making waves beyond the tech industry. Growing fears surrounding AI’s impact led to Hollywood’s most significant labor dispute in six decades, resulting in writers and actors going on strike and halting numerous film and TV productions.
DoorDash Implements Chatbot for Faster Orders, RailVision Analytics Saves Fuel with AI Software, and Twitter’s Rebranding as ‘X’ Piques Interest
Additionally, DoorDash, the US food-delivery service, is incorporating an AI-based chatbot to expedite orders and help customers find suitable food options.
Furthermore, Senator Ron Wyden called for multiple investigations of Microsoft over a breach of US officials’ email accounts by China-linked hackers, signaling the increasing concerns over cybersecurity and AI’s role in such incidents.
On the bright side, Montreal-based RailVision Analytics developed AI-enabled software to aid locomotive engineers in making small adjustments during train driving, potentially leading to significant savings in diesel fuel consumption.
Lastly, Twitter’s rebranding to “X” by Elon Musk has sparked curiosity. The “X” is tied to the idea of creating an “everything app,” and this move is likely to be closely watched by the tech world.
