Google parent company Alphabet Inc beat market expectations in the first quarter of this year with a net profit of US$15 billion, the company said on Tuesday, in a sign that the search engine behemoth is regaining its footing.
The company has found itself under pressure due to a general slowdown in advertising spending, excessive hiring during a COVID-19-era boom and a major challenge by Microsoft Corp on artificial intelligence (AI).
Its quarterly revenue was nearly US$70 billion, about US$1 billion better than expected by analysts for the three-month period in which the company announced that it would lay off 12,000 staff, or 6 percent of its workforce.
Photo: REUTERS
Microsoft’s results for the first three months of the year on Tuesday also pleased investors, lifted by its industry-leading business cloud products.
The company reported profit of US$18.3 billion on revenue of US$52.9 billion as cloud and AI more than offset a drop in revenue from licensing Windows software to computer makers, as sales plunged in that market.
Most market attention was on Google, which became a focus of worry when Microsoft-backed ChatGPT was released and quickly went viral late last year. The Windows maker has added the technology to its Bing search engine and office software.
Google has since rushed out Bard, its own version of language-based AI, but the release was seen as clumsy and has so far disappointed observers and company insiders, media reports said.
“We’ll continue to incorporate generative AI advances to make search better in a thoughtful and deliberate way,” Google CEO Sundar Pichai said during an earnings call. “And we will test and iterate as we go because we know that billions of people trust Google to provide the right information.”
An arms race over AI is expected to play out for several years and could prove to be expensive for the tech giants.
To get itself battle ready for the AI competition ahead, Google has reorganized its AI division, putting the independently run Deep Mind subsidiary inside the company in a division called Google Brain.
The threat from an AI-augmented Bing earlier this month sent Pichai on a rare US media tour to reassure that the company remained an industry leader on everything from search to maps and AI pioneering.
Meanwhile, Google-owned YouTube’s advertising revenue dropped for the third quarter in a row.
However, there was “strong watchtime growth” at the YouTube Shorts section, which was added to counter TikTok.
Despite challenges, Alphabet’s share price has recovered well from lows before January’s layoff announcements and on Tuesday shot up more than 4 percent in after-hours trading to US$108.4.
That was still well shy of the near US$150 seen in 2021, when ad revenue was pouring in.
Microsoft has been steadily pressing on with its AI revolution, this month announcing that it would apply the powers behind ChatGPT to its iconic Excel, Word and Outlook programs.
“We see that when people use the new AI features, their engagement with Bing and Edge goes up,” Microsoft CEO Satya Nadella said during an earnings call. “We look forward to continuing this journey in what is a generational shift in the largest software category — search.”
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