Alphabet and Microsoft report quarterly results substantially better than expected and capable of offering evidence of resistance to hi-tech crises. But their performance is being affected by a weakening economy, hurting one’s advertising revenue and the other’s cloud services and software. After the market, Wall Street, in expressing its first assessments, rewarded the stocks, pushing Alphabet, also supported by the announcement of a new buyback plan of its own securities worth 70 billion, up by as much as 4%, then downsized to 1.6 percent. Microsoft did even better, jumping 8.4 percent. The results seemed to investors to at least dispel the most pessimistic shadows.
Alphabet, 15 billion in profits
The first quarter of the year for Alphabet closed with profits slipping to 15.05 billion from 16.44 billion, equal to earnings per share of 1.17 dollars against 1.07 expected. Revenue surged 3% to $69.79 billion, over $68.9 expected. Crucial advertising revenue, which still accounts for a large part of the business, exceeded expectations at $54.55 billion, but was down on last year. The subsidiary YouTube in videos, particularly under observation because it suffers from competition from TikTok, pocketed 6.69 billion, respecting expectations.
The battle on AI
The Search and Other division generated revenue of $40.36 billion, up slightly. It launched a new AI-powered chatbot called Bard, burned by Microsoft’s bet on ChatGPT for its Bing search engine. The duel, which is difficult and expensive, however, appears to be in its infancy and open to any outcome: Samsung, as it has come to light in recent days, is considering changing the default option for searching its gadgets to Bing from Google. A potential slap in the face for the brand that so far controls 90% of the search market.
He cloud
In the cloud services business, on which it pays delays, the company snatched an operating profit of 191 million, reversing past losses. However, Google Cloud revenues amounted to 7.45 billion, less than the 7.49 anticipated.
Outlook and cuts
“The outlook remains uncertain,” Chief Financial Officer Ruth Porat admitted on the results conference call. It is no coincidence that Alphabet, to deal with the pressure, has recently launched, like other tech and digital giants, a drastic restructuring and savings plans, announcing the cut of 12,000 jobs. Quarterly charges related to layoffs and reductions in office space were 2.6 billion.