Tech titans Google and Microsoft announced better-than-expected earnings on Tuesday as the frenzy over artificial intelligence stokes investor excitement and breathes a new life into the sector.
The release of ChatGPT last year landed as technology giants were embarking on major layoffs and cost-cutting plans, with share prices hammered after flying high during the coronavirus pandemic.
For the second consecutive quarter, Microsoft has more than reversed the trend, seeing profits and sales soaring to the highest levels ever for the 48-year-old company co-founded by Bill Gates.
An earnings statement reported that net profit for Microsoft was $20.1 billion in the April to June period, up 20 percent year-on-year and above expectations.
The company posted $56.2 billion in sales, which also beat expectations, though the growth slowed from the previous quarter.
And even though its share price slipped in after-hours trading, the Windows-maker remains the world’s second most valuable company after Apple, with a market capitalization of $2.6 trillion.
Once again, business in the latest quarter was driven by the cloud, which relies heavily on artificial intelligence and accounts for more than half of the company’s sales.
Cloud sales grew by 21 percent year-on-year.
Microsoft shares lifted off last week when the company said it would charge $30 extra per user to turbocharge its Microsoft 365 product — which includes Word, Excel and Teams — with AI powers.
“Every customer I speak with is asking not only how, but how fast they can apply next generation AI to address the biggest opportunities and challenges they face and to do so safely and responsibly,” said Microsoft CEO Satya Nadella.