Google's parent company, Alphabet Inc., reported a strong financial performance for the last quarter of the year, with a 28% increase in profits and a 12% rise in revenue to $96.5 billion. However, the growth in its Google Cloud division linked to AI was less impressive than expected. This disappointment led to an 8% drop in Alphabet's stock price despite exceeding earnings per share forecasts. Industry analysts expressed worries about competitors like Microsoft being better positioned to capitalize on AI technology, while claiming Google's AI features in search results contributed to higher advertising revenue.
The early signs suggest that AI is working for Google, helping to retain users and elevate ad revenue, amid concerns over profitability in AI ventures.
The reaction underscores concerns that rivals like Microsoft, with its OpenAI partnership, are better positioned to convert AI hype into revenue.
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