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AI is paying off for some major cloud providers

May 01, 2024 - businessinsider.com
Major tech companies Amazon, Microsoft, and Alphabet have reported quarterly earnings that exceeded Wall Street's expectations, partly due to their investments in AI which have boosted their cloud divisions' revenue. These companies are seeing significant customer demand for AI and are investing to meet it. For instance, Amazon Web Services (AWS) reported net sales of $25 billion in its first quarter, a 17% increase from the same period last year, which the company attributes to its latest AI efforts. Similarly, Microsoft Cloud generated $35.1 billion in revenue, up 23% year-over-year, and Google Cloud reported sales of $9.6 billion, a 28% jump from last year.

Despite some critics questioning the longevity of these gains and predicting an AI-fueled stock market bubble burst in 2026, industry analysts and the tech giants themselves remain optimistic about the future of AI. Amazon CEO Andy Jassy detailed a plan to make AI Amazon's next big focus, Google CEO Sundar Pichai stated the company is well positioned for the next wave of AI innovation, and Microsoft announced a $1.7 billion investment into expanding cloud services and AI across Indonesia over the next four years.

Key takeaways:

  • Major tech companies like Amazon, Microsoft, and Alphabet are seeing significant returns on their investments in AI, with their cloud businesses reporting quarterly earnings that exceeded Wall Street's expectations.
  • Amazon Web Services, Microsoft Cloud, and Google Cloud have all reported increased revenues, which their respective CEOs have attributed in part to their investments in AI.
  • Despite predictions from research firm Capital Economics that the AI-fueled stock market bubble will burst in 2026, industry analysts and tech company executives remain optimistic about the continued growth and potential of AI.
  • Amazon, Microsoft, and Alphabet are all planning to continue investing in AI and expanding their AI services, indicating a belief in the long-term viability and profitability of this technology.
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