Tech giants Google and Microsoft reported better-than-expected earnings on Tuesday, as the frenzy over artificial intelligence (AI) stokes investor excitement and breathes new life into the sector.
Microsoft reported a net profit of $20.1 billion in the April to June period, up 20 percent year-on-year and above expectations. The company posted $56.2 billion in sales, which also beat expectations, though the growth slowed from the previous quarter.
Google parent Alphabet on Tuesday also reported profits that beat market forecasts as digital advertising revenue revived and its cloud business grew. The search engine giant reported net income of $18.7 billion on revenue of $74.6 billion in the recently ended quarter.
Both companies attributed their strong earnings to the growing adoption of AI, which is being used to power a wide range of products and services, from search to cloud computing to customer service.
“Every customer I speak with is asking not only how, but how fast they can apply next-generation AI to address the biggest opportunities and challenges they face and to do so safely and responsibly,” said Microsoft CEO Satya Nadella.
Alphabet chief executive Sundar Pichai said that AI is “driving the next evolution of Search, and improving all our services.”
The strong earnings from Google and Microsoft come as investors are increasingly bullish on the future of AI. A recent survey by the research firm Gartner found that 80 percent of organizations believe that AI will be “very or somewhat important” to their business in the next two years.
“AI is one of the most important technology trends of our time, and it is having a transformative impact on businesses of all sizes,” said Gartner analyst Brian Burke.
The growth of AI is also being driven by the increasing availability of data and the development of new algorithms. As AI becomes more sophisticated, it is being used to solve a wider range of problems, from fraud detection to customer service to medical diagnosis.
“The possibilities for AI are endless,” said Nadella. “We are just beginning to see the impact it will have on our lives and our businesses.”
