Google and Microsoft with significantly higher sales and profits

Google's advertising business has so far defied the AI challengers without any problems. In the past quarter, Google's advertising revenue increased by a good 13 percent year-on-year to 61.66 billion dollars (57.49 billion euros). The video subsidiary YouTube contributed a good eight billion dollars - around 21 percent more than in the same quarter of the previous year.

The development of Google's advertising business - especially in web search as the most important source of revenue - is being monitored very closely. A key question is whether attempts by competitors to use artificial intelligence to display direct answers instead of links will leave a mark on the search engine that has dominated the market for years. Some investors are betting on this: the challenger Perplexity AI was valued at more than one billion dollars in a recent financing round.

Optimism at Google

Meanwhile, Google is also trying to improve its own web search with AI functions. For example, search queries can be triggered on Samsung's new top smartphone Galaxy S24 and newer models of Google's own Pixel phones by circling an object or word on the display.

Recently, such offers have been increasingly used, said CEO Sundar Pichai on Thursday. He expressed his conviction that Google would succeed in adapting its business model to the new AI opportunities.

At Google's parent company Alphabet, turnover rose by 15 percent year-on-year to 80.5 billion dollars. Analysts had expected an average of only around 79 billion dollars. Group profit grew to 23.66 billion dollars from just over 15 billion dollars a year earlier.

Growth in the business with software and computing power from the cloud also contributed to this. The division increased its operating profit to 900 million dollars from 191 million dollars in the same quarter of the previous year.

Microsoft increases sales

Rival Microsoft also sent a clear signal that its investments in the cloud and artificial intelligence are paying off. The software giant concluded a pact with the ChatGPT developer OpenAI and is integrating AI functions into more and more of its products on this basis. The need for computing power for artificial intelligence is in turn driving Microsoft's cloud business.

Microsoft increased its turnover by 17 percent year-on-year to just under 62 billion dollars in the third quarter ended March. Profits grew by a fifth to almost 22 billion dollars. Both exceeded experts' expectations. Sales of Microsoft's cloud platform Azure rose by 31 percent.

At Alphabet, turnover from "other bets" - future projects such as self-driving cars or delivery drones - rose from 288 to 495 million dollars. The division's operating loss was reduced from 1.22 billion dollars a year ago to just over one billion dollars.

Shares gain

Alphabet shares jumped by a good eleven percent in after-hours trading. Alphabet announced a dividend of 20 cents per share for the first time - and also held out the prospect of distributions in the future. Microsoft's share price rose by a good four percent. With a market value of around three trillion dollars, Microsoft is currently the most valuable listed company in the world.

Facebook group Meta announced on Wednesday that it wants to become the number one in AI. Facebook founder Mark Zuckerberg's big AI plans will bring the company into greater competition with chatGPT developer OpenAI and other tech heavyweights such as Microsoft, Google and Amazon, who all want to play a leading role in artificial intelligence. (SDA/swi)