MS, “6% of Cloud Azure’s 30% growth is due to AI”
Google misses ad sales forecast… After-hours trading 5.7%↓
AMD AI chip demand forecast to weaken… After-hours trading 6.5%↓
Amid the announcement of US big tech performance, Microsoft (MS), No. 1 in world market capitalization, announced its highest performance in two years, taking the lead in monetizing the artificial intelligence (AI) craze. However, AMD predicted weakening demand for AI chips in the first quarter (January to March), and Google’s advertising sales fell below market expectations, suggesting that the U.S. economy may not be as good as indicators, leading to an overall decline in stock prices.
On the 30th (local time), Microsoft announced in its fiscal second quarter (October-December) earnings announcement that sales were $62 billion, an increase of about 18% compared to the same period last year. This figure exceeded Wall Street expectations ($61.2 billion). Earnings per share were also $2.93, higher than market expectations ($2.78). Accordingly, Microsoft’s net profit for this quarter increased 33% to $21.9 billion, setting a record for its highest performance since the June-September quarter of 2021.
MS, which joined hands with Open AI to dominate the AI company market last year, is said to have proven that the AI craze can lead to actual performance through the growth of the cloud sector. Sales of Microsoft’s cloud platform Azure and other cloud services increased 30% compared to the same period last year, also exceeding market expectations (27% growth). Microsoft revealed that 6 percentage points of Azure’s growth rate was due to AI growth.
“We have moved from talking about AI to applying AI at scale,” Microsoft CEO Satya Nardelli said in a statement. “By introducing AI at every layer of our technology stack, we are winning over new customers and driving new benefits and increased productivity across all sectors.”
MS is considered the leading AI company and is solidifying its No. 1 position in market capitalization, beating Apple. The stock price has risen about 70% in the past year. However, there are many doubts in the market about whether the AI craze will lead to actual profits.
On this day, AMD, which is considered a leader in AI chip development after Nvidia, failed to meet market expectations in its first quarter performance guidance. AMD’s sales in the fourth quarter of last year (October-December) were $6.2 billion, exceeding the market forecast ($6.13 billion), but the sales forecast for the first quarter was “$5.4 billion plus or minus $300 million.” revealed. This figure is lower than market expectations ($5.73 billion). AMD shares plunged 6.5% in after-hours trading, signaling that demand for AI chips this year may be lower than expected.
Nvidia, which rose slightly even as the Philadelphia Semiconductor Index fell 1.56% during regular trading on this day, also fell about 1.8% in after-hours trading after AMD’s earnings announcement.
Shares of Google’s parent company, Alphabet, which announced its fourth quarter results last year on this day, also fell 5.7% in after-hours trading. Although sales exceeded market expectations with $86.81 billion and earnings per share of $1.64, Google’s core business, advertising sales, came in at $65.5 billion, slightly lower than the forecast ($66 billion), which contributed to the stock price decline.
Thomas Mondeiro, an analyst at Investing.com, said, “The fact that Alphabet’s advertising sales fell below market expectations means that companies are still uncertain about the speed of interest rate cuts by global central banks.”
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.