Investments in artificial intelligence (AI) are continuing to fuel the tech sector boom after strong earnings for Google, Microsoft, and Snap but Meta suffered a plunging share price despite a positive first quarter.
As reported by Fast Company, AI is proving to be the catalyst for growth as investors prosper from the advantages gained by the new technology.
Snap’s earnings report sent its share price soaring, up more than 30%, with an upbeat outlook advised. The company expects its daily active users to rise to 431 million, an increase of 9 million, to surpass the expectations of analysts.
AI business is booming for Microsoft and Google
Google-parent company Alphabet enjoyed a 13% spike in its holdings along with an announcement of a dividend for shareholders (20 cents per share) and a bumper $70 billion buyback of stocks. Microsoft also enjoyed modest increases in its shares, despite spending billions on AI infrastructure.
In its Azure cloud computing division, Microsoft reported $26.7 billion in revenue overall, a jump of 20%. Company chief executive Satya Nadella outlined how its AI software add-ons are making further gains for the world’s largest public company.
“Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry,” said Nadella.
Meanwhile, Alphabet CEO Sundar Pichai welcomed the ongoing advances creating prosperity for the tech giant as its cloud revenues totaled $9.6 billion, with the “Gemini era” underway.
“There’s great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation”, stated Pichai.
Why has Meta suffered losses in its share price?
So what about Meta?
The parent company of Facebook, Messenger, Instagram, WhatsApp, and Threads saw its shares suffer a sharp tumble on Thursday (25 Apr), plummeting 10.5% and a collective loss of value to the tune of around $100 billion.
That was despite Meta posting a revenue increase of 27% on Wednesday and seeing its profits double over the first quarter.
However, the difference is investors were spooked by Meta CEO Mark Zuckerberg’s warning that significant spending on AI is set to continue, whilst it will take a significant amount of time before fluid profits are returned.
The intensive cost and computing power required to make gains in new technology means Meta spending forecasts for the year have increased from £35 billion to $40 billion.
Compared to Alphabet, Microsoft, and Snap, Zuckerberg presented his company’s earnings differently and the focus on how money is being spent has influenced the market and subsequent share losses. All of the tech competitors will continue to make big outlays on AI but communication and presentation matter.
Image credit: Ideogram
The post “AI business is booming for Microsoft and Google, but some rivals falter” by Graeme Hanna was published on 04/26/2024 by readwrite.com