Alphabet and Microsoft Surpass Earnings Expectations, Fueled by AI-Driven Growth in Advertising and Cloud Services
Alphabet and Microsoft reported stronger-than-expected quarterly earnings, driving up their stocks by over 10% for Alphabet and nearly 5% for Microsoft in after-hours trading.
Investors remain optimistic about the companies' core businesses, which are fueled by the advancement of AI technology.
US tech giants continue to show strong momentum in the first quarter.
Alphabet, the parent company of Google, reported strong growth in its Q1 advertising sales, driven by a better economic climate and significant investments in AI technology.
Google's advertising revenue grew by 13% to $61.66 billion, accounting for 77% of Alphabet's total revenue, which increased by 15% from the previous year.
Meanwhile, Microsoft's cloud business continues to thrive Microsoft, the other tech giant, also had a successful quarter, with its cloud business, Azure, continuing to grow.
Azure's revenue increased by 23% year on year, contributing to a 14% increase in Microsoft's total revenue.
The company's productivity and business processes segment, which includes Office and LinkedIn, also saw a 12% revenue growth.
Both companies' strong earnings results and the continued growth of their core businesses provide optimism for the AI sector.
Alphabet, the parent company of Google, reported stronger-than-expected earnings for Q2 2022.
The company posted earnings per share of $1.89 on revenue of $80.54 billion.
Both the YouTube advertising and Google Cloud segments surpassed market expectations.
YouTube advertising generated $8.09 billion in revenue, while Google Cloud brought in $9.57 billion.
Google Cloud revenue grew by 28% year-over-year, and the division reported an operating income of $900 million, a significant increase from $191 million in the same quarter last year.
Investors were pleased with Google Cloud's accelerated growth.