"Alphabet and Microsoft Stocks Soar on Promising AI Results"
In a remarkable turn of events, Alphabet and Microsoft's shares skyrocketed on Friday, following their impressive Q1 earnings reports, which demonstrated that their significant investments in artificial intelligence (AI) were paying off handsomely. These positive earnings reports came as a welcome relief after Meta Platforms' disappointing earnings forecast earlier in the week.
Alphabet, the world's fourth most valuable company, saw its shares jump by a staggering 10%, pushing its market value above the $2 trillion mark for the first time. The company's market value grew by approximately $180 billion, with Alphabet's stock reaching an all-time high of $2,284.43 during intraday trading. The surge in Alphabet's shares was partly due to its decision to reward shareholders with a maiden dividend and a $70 billion stock buyback program.
Similarly, Microsoft's shares rose by nearly 3%, adding more than $80 billion to its market value. Microsoft's Q1 earnings report revealed that its revenue growth was outpacing expectations, thanks to the growing popularity of its AI-powered services like the Copilot AI assistant and the Gemini chatbot.
According to Microsoft's CFO, Amy Hood, AI services accounted for 7% of the 31% increase in revenue generated by its Azure cloud-computing platform. Hood also noted that near-term AI demand was slightly outpacing the company's capacity, highlighting the need for further investment in infrastructure expansion.
Google's cloud revenue increased by approximately 28%, with strong growth in Google Workspace, where Alphabet offers a wide range of AI features powered by its large language model, Gemini. These results contrasted sharply with Meta's warning of increased spending and softer-than-expected growth.
The strong earnings reports from Alphabet and Microsoft sparked a rally in other technology stocks, with Amazon.com's shares rising by 2%. AI chip stocks, including Nvidia, Broadcom, and Marvell Technology, also saw their shares rise by between 1% and 2%.
Analysts have raised their price targets for both Alphabet and Microsoft, with the median view for Alphabet now at $176.65 and $475 for Microsoft. Microsoft's forward price-to-earnings ratio stands at 30.40, compared to Alphabet's 21.63.
In conclusion, Alphabet and Microsoft's impressive Q1 earnings reports have demonstrated the immense potential of AI as a significant driver of growth. With AI-powered services becoming increasingly popular, tech giants are investing heavily in infrastructure expansion, setting the stage for an intense AI arms race. These positive developments are likely to create a ripple effect, benefiting other technology stocks and AI chip manufacturers.
Source: Reuters
URL: <https://www.channelnewsasia.com/business/alphabet-microsoft-shares-jump-proof-near-term-ai-returns-4294551>
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