Microsoft, Google beat earnings expectations

SAN FRANCISCO

Tech titans Google and Microsoft announced better-than-expected earnings on July 25 as the frenzy over artificial intelligence stokes investor excitement and breathes a new life into the sector.

The release of ChatGPT last year landed as technology giants were embarking on major layoffs and cost-cutting plans, with share prices hammered after flying high during the coronavirus pandemic.

For the second consecutive quarter, Microsoft has more than reversed the trend, seeing profits and sales soaring to the highest levels ever for the 48-year-old company co-founded by Bill Gates.

An earnings statement reported that net profit for Microsoft was $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.

Once again, business in the latest quarter was driven by the cloud, which relies heavily on artificial intelligence and accounts for more than half of the company's sales.

Cloud sales grew by 21 percent year-on-year.

While the latest talk has surrounded AI, what matters most for Google earnings currently is digital advertising, where it gets the bulk of its revenue.

The company said that advertising revenue hit $58.1 billion, which outshined analysts' expectations of $57.45 billion.

Google is also a player in the cloud computing industry, where revenue came in at $8 billion, compared with $6.3 billion the unit took in during the same period a year earlier.

Google has played a close second to the partnership between Microsoft and OpenAI in rolling out its AI products following the release of ChatGPT.