AI Stock market companies
Key Points
- Microsoft's revenue rises 18% YoY, surpassing estimates; Azure revenues up by 30%.
- Alphabet's Q4-2023 revenue increases by around 13%, with challenges in digital advertising.
- Microsoft overtakes Apple as the world's most valuable company.
The fourth quarter earnings reports are in for the two tech giants, Microsoft and Alphabet. The results reveal a robust performance from both entities; however, they also indicate a divergence in their respective strategies concerning artificial intelligence (AI). Given this scenario, it is crucial to delve deeper into these earnings reports to determine who truly won this round.
Microsoft recently overtook Apple as the world's most valuable company – an accomplishment that its Q4 report clearly justifies. Its revenue rose 18% year on year to $62 billion, comfortably eclipsing analysts' estimates of $61.14 billion. Furthermore, operating income saw an impressive 33% increase from last year or 25% based on non-GAAP measures. In terms of EPS too, Microsoft outshone expectations with an annual growth rate of 33%, translating into a figure of $2.93 per share.
One area where Microsoft has truly excelled is cloud computing - its intelligent cloud segment witnessed a commendable 20% rise YoY with Azure revenues scaling up by 30%. Bing Chat's performance was somewhat muted but still represented a decent uptick at 8%.
Alphabet also presented strong numbers for fiscal Q4-2023 despite grappling with challenges in digital advertising due to market slowdowns. Its revenue experienced a hike of around 13%, reaching $86.3bn which surpassed consensus projections set at $85bn mark; however, ad-revenue fell slightly short causing the stock price to dip by about six percent during after-hours trading.
EPS figures surged from $1.05 to $1.64 courtesy of favorable equity securities that improved by approximately two billion dollars while operating income climbed up by thirty percent ending at nearly twenty-four billion dollars ($23.bn).
Both companies have had remarkable runs over the past few years and continue showing promising growth rates across top-line and bottom-line metrics alike in recent quarters.
However, if one were forced to pick between the two, Microsoft seems to have a more strategic approach towards AI. It has integrated its AI-powered Copilot tool across various products – from Office 365 suite and Github to Azure and Bing. This coupled with their OpenAI partnership is proving to be a game-changer.
Also reed: OpenAI Unveils Upgrades and Price Cuts Across AI Models
Alphabet too has been dabbling in AI for quite some time now; it acquired DeepMind but only recently integrated it with Google Brain last year. Despite having the technical capability of rolling out its own chatbot, Alphabet lagged behind as OpenAI's ChatGPT led the narrative on AI chats.
While Alphabet certainly isn't far behind in terms of technology, their strategy and application seem somewhat lacking when compared against Microsoft's comprehensive approach towards leveraging generative AI capabilities.
Microsoft not only planned meticulously for this moment but also took calculated risks such as partnering up with OpenAI which are paying off handsomely. The company boasts a diversified product range unlike Alphabet that relies heavily on advertising revenue streams which so far haven't reaped significant benefits due to lack of impactful integration with AI technologies.
Although Microsoft stocks might be pricier than Alphabet’s at present, they offer better value considering their promising long-term prospects within the realm of new-age technology like artificial intelligence.
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