Big tech is benefiting from the continuous movement to the cloud. Both Google and Microsoft saw substantial revenue increases in this sector, thanks in part to the explosion in AI investments.
Last quarter we came with the news that Google Cloud had become profitable for the first time. Fiscal results are now generally positive at Google and competitor Microsoft as well, with cloud providing the biggest gains.
Microsoft performs above expectations
Microsoft itself notes that the results for the fiscal quarter (through the end of June) are this positive mostly thanks to its own cloud division. Microsoft Cloud posted revenue of $30.3 billion (€27.4 billion), which was 21 percent more than exactly a year ago.
It starkly contrasts the revenue from Windows license and equipment sales, which declined 4 percent.
Overall, Redmond fared better than expected: where Wall Street had counted on quarterly revenue of $55.47 billion (50.12 billion euros), it raked in $56.2 billion (50.78 billion euros). Total earnings for the financial quarter were 20.1 billion (18.16 billion euros), which marks a 20 percent increase from the previous quarter.
Google Cloud: already profitable for two quarters
As with Microsoft, the sounds are positive with Google’s quarterly results. Google Cloud’s profit over the past three months was $395 million (356.91 million euros), a huge difference from the nearly 1 billion it lost over the same period a year ago.
Google Cloud revenue rose 28 percent this quarter, to more than $8 billion (7.2 billion euros). According to Google CEO Sundar Pichai, third-party use of its own cloud infrastructure to train AI models is an important source of new customers. Google’s parent company Alphabet saw revenue rise 7 percent to $74.6 billion (67.4 billion euros) this quarter.
After the huge growth during the corona pandemic, it took a while for positive signs to return from the tech sector. Surely, thanks to the AI hype that started with ChatGPT, many big tech companies are better positioned for a while to turn this around. Earlier this year, Nvidia managed to turn the huge demand for AI hardware into a market value of more than $1 trillion, a one-off.
Also read: Nvidia benefits hugely from hype around AI