Google and Microsoft both reported earnings that were better than expected on Tuesday. The excitement over artificial intelligence (AI) is making investors happy and giving the tech industry a new lease on life.
Last year, when ChatGPT came out, big tech companies were laying off a lot of people and cutting costs. Share prices were falling after being high during the coronavirus pandemic.
For the second quarter in a row, Bill Gates’ company Microsoft has more than turned the trend around, with profits and sales soaring to their highest levels ever.
An earnings statement said that Microsoft’s net profit from April to June was $20,1 billion, which was up 20% from the same time last year and more than what was expected.
The company made $56.2 billion in sales, which was more than expected but less than the previous quarter’s rise.
Even though its share price went down in after-hours trading, the company that makes Windows is still worth $2.6 trillion, making it the second most valuable company in the world after Apple.
Once again, the cloud, which uses AI a lot and makes up more than half of the company’s sales, drove business in the last quarter.
Sales in the cloud grew by 21% from one year to the next.
Last week, Microsoft stock went up after the company said it would charge an extra $30 per user to add AI features to its Microsoft 365 product.
Alphabet, the company that owns Google, also reported profits on Tuesday that were higher than what the market had expected. This was because digital advertising sales picked up and Alphabet’s cloud business grew.
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In the last quarter, the search engine giant made a net profit of $18.7 billion on sales of $74.6 billion.
