What we learned from big tech company earnings reports

Tech giants Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), and Meta (META) have reported earnings in recent days, highlighting the monetizing role of enterprise artificial intelligence (AI). , provided important insights. Their AI plans for him.

All five companies benefit from the enterprise business segment, where corporate customers pay for services such as the cloud and software platforms and devices they use in their workflows.

All of them are also members of the “Magnificent Seven,” which is expected to be the biggest contributor to S&P 500 earnings in the quarter, according to FactSet forecasts.

AI advantage boosts Microsoft's revenue

Chief Executive Officer Satya Nadella said Microsoft's revenue beat expectations, driven by growth from the “AI advantage” of Azure, the company's cloud division.

The company reports that it has 53,000 Azure AI customers, one-third of whom used the service for the first time in the past year. Microsoft has named several major companies that use its AI tools, including Ally Financial (ALLY), Walmart (WMT), and Coca-Cola (KO).

Microsoft offers Copilot, an AI assistant, and Azure Maia AI Accelerator, its own AI-optimized chip. The company also said it is committed to expanding its AI efforts across all segments.

Microsoft has defined itself as a leader in the AI ​​race and is ranked top among analysts with its ongoing OpenAI partnership.

AI enhances Alphabet's services at a cost

Google's parent company Alphabet reported lower-than-expected customer and ad revenue for its AI-powered enterprise cloud and workspaces in the fourth quarter.

The company has announced that Duet AI, which will add AI tools to Google Workspace, and Vertex AI, which will use Gemini chips to enable generative AI (GenAI) tools for Google Cloud customers, will be used by many companies including McDonald's (MCD) He said that he has contributed to the acquisition of corporate customers. Verizon (VZ), Moody's, Victoria's Secret (VSCO).

“More customers are choosing the Duet AI package AI agent for Google Workspace and Google Cloud Platform to increase productivity and improve their operations,” Alphabet CEO Sundar Pichai said.

Google said it is using AI powered by Gemini to improve advertising across search and YouTube for the benefit of retail advertisers. Gemini also features the company's AI chatbot Bard, which is comparable to OpenAI's ChatGPT.

AI is a big-ticket investment that drove up capital spending in the fourth quarter, so rising costs caught investors' attention in the earnings report. Pichai said there will be “remarkably large” capital spending in 2024, but noted that Alphabet is trying to remain disciplined in its growth investment plans.

AI-powered AWS drives Amazon revenue

Amazon reported that GenAI tools in Amazon Web Services (AWS), its cloud computing business and largest revenue driver, supported quarterly revenue growth throughout 2023.

The company said this year was a “significant year for delivery and customer trials” of Gen AI services such as Bedrock and its Amazon Q coding assistant.

The e-commerce giant launched its own AI chip called AWS Inferentia in late 2023. Amazon says several corporate customers are using the chip, including Anthropic, Airbnb (ABNB), and Snap (SNAP), among others.

Amazon's revenue reflects the start of GenAI monetization across the company's enterprise division, with CEO Andy Jassy predicting that GenAI will generate “tens of billions of dollars over the next few years.” He said he expects the project to generate revenue of 10,000 yen.

The company is considering consumer GenAI tools for retail customers. For example, Amazon launched his GenAI tool that summarizes customer reviews.

Meta seeks open AI and tries to catch up

Meta is still in the early stages of its AI efforts compared to some of its peers, and is pushing to open up the field as it develops new models.

“We expect our ambitious long-term AI research and product development efforts to require increased infrastructure investment beyond this year,” Meta CEO Mark Zuckerberg said in a statement. “This is a significant step forward in our vision of evolving AI and the Metaverse,” he added. . ”

Facebook's parent company offers Llama 2, an open source large-scale language model (LLM) model, and Meta said it is training Llama 3.

Zuckerberg said during the company's earnings call that Meta intends to integrate future AI tools into its apps, including Facebook, WhatsApp, Instagram and Threads.

He added that the company's “big goal” is to provide businesses, consumers and developers with an AI assistant that will help the company better compete with Microsoft and Google.

Unlike Microsoft and Google, which rely on closed AI models, Meta has been vocal in supporting openness for AI creators.

Apple works on GenAI, refrains from announcement

So far, Apple has kept many of the details of its AI efforts private, but said it plans to reveal more soon. Asked about the company's AI projects during an earnings call, CEO Tim Cook said Apple had “some things we're really excited about, and we'll talk about them later this year.” ” he said.

Cook added, “There is a huge opportunity for Apple in GenAI.” Earlier this year, Bank of America analysts raised their price target for Apple, saying the company could benefit from the integration of AI capabilities into the iPhone.