A cloudy forecast for Big Tech and A.I.
The Nasdaq composite index looks set to open in the red on Wednesday, after investors got a split-screen view of how two tech giants, Microsoft and Alphabet, were doing in efforts to profit from artificial intelligence.
The verdict so far, based on quarterly earnings reports released on Tuesday: Only one of them is showing early progress. That raises questions about the tech industry’s multibillion-dollar bet on the power of A.I.
Microsoft shares are up 3.9 percent after exceeding expectations. The company reported $56.3 billion in sales, largely on the strength of its Azure cloud business. Some of that growth came from generative A.I., where Microsoft has invested big: It has poured $13 billion into OpenAI, the firm behind ChatGPT, and built that technology into its Bing search engine.
Satya Nadella, Microsoft’s C.E.O., told analysts that more than 18,000 organizations were using Azure OpenAI, including new customers. (The Information reported on Tuesday that some early OpenAI customers were switching to cheaper alternatives … including Microsoft.)
It was a different story for Alphabet, whose shares were down 6.2 percent premarket. The company on Tuesday reported “meaningful growth” in its Google search and YouTube business lines, but its cloud results came in well below forecasts. Analysts appear to be concerned that it’s falling behind Microsoft and Amazon in the market for cloud computing, which customers are buying to help power their A.I. initiatives.
On Tuesday’s earnings call, Sundar Pichai, Alphabet’s C.E.O., doubled down on the technology. “We’ll do everything that is needed to make sure we have the leading A.I. models and infrastructure in the world, bar none,” he said.
Alphabet faces legal headwinds, too. The Justice Department’s antitrust case against the company resumes on Wednesday, with the internet giant scheduled to begin its defense shortly. Here’s a recap of the landmark proceedings,…
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