Microsoft and Alphabet Post Strong Revenue Growth

Tech giants Microsoft and Alphabet demonstrated that heavy investments in artificial intelligence (AI) can drive revenue growth, alleviating investor concerns raised earlier in the week by Meta. The social media company had cautioned that its costly venture into AI might not yield immediate returns.

Shares in Google-parent Alphabet surged over 11% in Frankfurt on Friday, with Microsoft shares rising nearly 5%. This upbeat response followed a steep drop in Meta’s stock by over 10% on Thursday, after the company indicated that its AI investment strategy could take years to show significant financial benefits.

Microsoft surpassed Wall Street’s expectations for its third-quarter revenue and profit, attributing this success to increased adoption of AI within its cloud services. The company’s growth in this sector helped ease investor worries about the profitability of large-scale AI projects.

Alphabet also delivered strong results, announcing its first-ever dividend and a $70 billion stock buyback, following a quarter that exceeded expectations in sales, profit, and advertising revenue. These developments signal the company’s confidence in its AI strategy and ongoing growth prospects.

The contrasting performances of these tech titans highlight the varying timelines and outcomes associated with AI investments. While Meta’s stock struggled due to its cautious outlook on AI, Microsoft and Alphabet’s positive earnings reports suggest that strategic investments in AI can lead to tangible revenue gains and increased investor confidence.