Investment in artificial intelligence (AI) continues to fuel the tech sector’s surge following strong earnings from Google, Microsoft and Snap, but Meta suffered a share price decline despite a positive first quarter.
As reported fast company, AI is proving to be a catalyst for growth as investors get rich from the benefits derived from the new technology.
Snap’s earnings report sent its share price soaring more than 30% suggesting a promising outlook. The company expects its daily active users to grow to 431 million, 9 million more than analysts’ expectations.
AI business is booming for Microsoft and Google
Google-parent company Alphabet Its holdings surged 13% after it announced a dividend to shareholders (20 cents per share) and a bumper $70 billion buyback of shares. Despite spending billions on AI infrastructure, Microsoft shares rose modestly.
In its Azure cloud computing division, Microsoft reported overall revenue of $26.7 billion, a jump of 20%. The company’s Chief Executive Satya Nadella explained how its AI software add-ons are bringing more profits to the world’s largest public company.
“Microsoft Copilot and Copilot Stack are ushering in a new era of AI transformation, driving better business outcomes across every role and industry,” Nadella said.
Meanwhile, Alphabet CEO Sundar Pichai welcomed the ongoing progress that is generating prosperity for the tech giant as its cloud revenues totaled $9.6 billion with the “Gemini era”.
“There is great momentum in the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation”, Pichai said.
Why has Meta suffered losses in its share price?
So what about meta?
Shares of the parent company of Facebook, Messenger, Instagram, WhatsApp and Threads saw a sharp decline on Thursday (April 25), falling 10.5% and causing a collective loss worth about $100 billion.
that was despite Meta reports 27% growth in revenue on Wednesday and its profit doubled compared to the first quarter.
The difference, however, is that investors were spooked by Meta CEO Mark Zuckerberg’s warning that significant spending on AI would continue, while liquid profits would take a long time to return.
The intensive costs and computing power required to turn a profit in the new technology mean that forecasts for meta spending for the year have increased from £35 billion to $40 billion.
Compared to Alphabet, Microsoft and Snap, Zuckerberg presented his company’s earnings differently and focused attention on how the money was being spent, leading to market and subsequent stock losses. All technology competitors will continue to spend big on AI but communication and presentation matter.
Image Credit: Ideogram
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