Investment in artificial intelligence (AI) continues to fuel the tech sector’s boom after Google, Microsoft and Snap posted strong gains, but Meta saw its share price fall despite a positive first quarter.
As Fast Company reports, AI is proving to be a catalyst for growth as investors reap the benefits of the new technology.
Snap’s earnings report sent its stock price up more than 30% while recommending an optimistic outlook. The company expects its daily active users to increase by 9 million to 431 million, exceeding analysts’ expectations.
The AI business is booming for Microsoft and Google
Google parent Alphabet saw its holdings rise 13% along with the announcement of a dividend to shareholders (20 cents per share) and a record buyback of shares worth $70 billion. Microsoft also saw its shares rise slightly despite spending billions on AI infrastructure.
In its Azure cloud computing division, Microsoft reported total revenue of $26.7 billion, up 20%. The company’s CEO, Satya Nadella, explained how its AI software add-ons are driving further profits for the world’s largest publicly traded company.
“Microsoft Copilot and the Copilot stack usher in a new era of AI transformation, driving better business outcomes across all roles and industries,” said Nadella.
Meanwhile, Alphabet CEO Sundar Pichai hailed continued progress bringing wealth to the tech giant as its cloud revenues totaled $9.6 billion and the “Gemini Era” is underway.
“There is great dynamism throughout the company. “Our leadership in AI research and infrastructure, as well as our global product presence, position us well for the next wave of AI innovation,” said Pichai.
Why did Meta suffer price losses?
So what about meta?
The parent company of Facebook, Messenger, Instagram, WhatsApp and Threads experienced a sharp drop in its shares on Thursday (April 25), falling 10.5% and causing a collective loss of around $100 billion.
That’s despite Meta reporting a 27% increase in revenue on Wednesday and doubling its profit compared to the first quarter.
The difference, however, is that investors have been spooked by Meta CEO Mark Zuckerberg’s warning that significant spending on AI will continue, although it will still take a long time to see flowing profits.
Due to the high costs and computing power required to make progress with new technologies, meta spending forecasts for the year have risen from £35 billion to $40 billion.
Compared to Alphabet, Microsoft and Snap, Zuckerberg presented his company’s profits differently, and the focus on how money is spent has influenced the market and resulting stock losses. All technology competitors will continue to spend heavily on AI, but communication and presentation are important.
Photo credit: Ideogram