Tech companies are doing very well, Meta 35, Google 34, Microsoft reported an 11 percent profit increase.
Over the past few years, Meta has faced criticism from investors for spending on futuristic projects like artificial intelligence, chatbots, and the metaverse. Now Meta wants everyone to know that some of those investments are starting to pay off. “We had a strong quarter driven by the advancement of AI in our business applications,” Meta CEO Mark Zuckerberg said in a statement. According to the company, more than 3.29 billion people use one or more of Meta’s applications daily, which include Facebook, Instagram and WhatsApp The Silicon Valley company reported double-digit revenue and profit growth on Wednesday reported from the third quarter, which is largely due to the development of its systems for targeting ads and offering users relevant posts and videos. According to the company, the result is also due to continuous investments in artificial intelligence.
Revenue was $40.6 billion, up 19 percent from a year earlier, and profit was $15.7 billion, up 35 percent from $11.6 billion a year earlier. But Meta also said it would continue the massive spending spree that has spooked Wall Street. The company said it had $23.2 billion in spending in the third quarter, as well as $9.2 billion in capital expenditures, including its AI infrastructure, building out the world of the metaverse, and other things. The company also raised its annual spending forecast to $38-40 billion from the $37-40 billion planned in July. The company said it expects “significant acceleration in infrastructure spending growth” in 2025 as it continues to invest in building new data centers and other AI-related costs.
Based on third quarter data, Meta’s digital advertising business continues to underpin its extravagant spending. Executives say its massive investment in AI will improve all of its services. The company has already raised its spending forecast several times this year. “Meta excels across the board, and AI is clearly the engine of growth,” said Jesse Cohen, senior analyst at Investing.com. “That said, investors seem disappointed by the company’s outlook and the rising costs of developing AI features.”
Meta has shown the fruits of its investments in recent weeks. He presented a new virtual reality headset and augmented reality glasses with holographic technology built into the lenses. It also improved its AI assistant and introduced an AI toolkit that can automatically create, edit and sync videos instantly with AI-generated sound effects, ambient noises and background music. Some of the investments have brought unexpected success: sales of the Meta Ray-Ban smart glasses – which allow people to take photos and videos and listen to music with the glasses – have exceeded expectations and have become popular in Ray-Ban retail stores across Europe – the company said.
Alphabet, Google’s parent company, also reported strong revenue growth reportedas its business remains outstanding despite tough regulatory scrutiny and increasing competition. The company spent $13 billion on capital expenditures in the third quarter, including big investments in data centers and AI chips, up 62 percent from a year earlier. Alphabet reported sales of $88.3 billion in the third quarter, which was 15 percent more than a year earlier, and profit rose 34 percent to $26.3 billion.
The results showed that Alphabet’s popular online services, led by search engine Google and video platform YouTube, remained central players for marketers to get their ads in front of consumers. The company has maintained its huge profits amid government calls to break up its business and greater competition for advertisers from TikTok, Amazon and others. The company has turned to artificial intelligence and competes with Microsoft and OpenAI for chatbot users, developers and enterprise customers. Alphabet continued to invest heavily in data centers, chips and other hardware in the third quarter, saying it spent $13 billion on capital expenditures, a 62 percent jump from a year earlier.
Google CEO Sundar Pichai said on a call with financial analysts that investing in AI will “pay off and drive the company to success.” Alphabet is fighting two cases brought by the Justice Department targeting its online advertising business. In August, a federal judge ruled against Google in a landmark ruling, saying the company operated as an illegal monopoly to maintain its edge in the search business. The Justice Department said it is considering seeking remedies that would, among other things, force Google to divest its Chrome web browser and Android mobile operating system.
Another ruling is expected in the coming months in a case related to Google’s technology for advertisers and publishers. Government lawyers have also asked for a spin-off of part of Google’s advertising business as a possible remedy. Google denied wrongdoing in both cases. Pichai said the company “intends to vigorously defend” itself in the cases. “Some of the court’s early proposals were far-reaching,” he told analysts. “They may have unintended consequences, particularly for the dynamic technology sector and American leadership there.”
Next year, Google’s share of the search ad market is expected to fall below 50 percent as Amazon and TikTok increase search ad sales, according to eMarketer, a research group that tracks online markets. It would be the first time Google has dipped below the threshold since eMarketer began tracking the metric in 2008. Despite this, Google’s search engine, its largest business, continues to post strong revenue growth. Search engine revenue rose 12 percent to $49.4 billion in the third quarter. Growth was driven by insurance ads and retail ads, said Philipp Schindler, Google’s chief business officer. YouTube’s ad revenue rose 12 percent to $8.9 billion, the platform boosted by election-related ads, Schindler said. Google Cloud, the business that offers software and technology services to other businesses, grew 35 percent to $11.4 billion in revenue. The unit posted a record operating profit of $1.95 billion in the third quarter.
Microsoft also reported financial results on Wednesday reportedwhich may allay investor jitters about significant spending on artificial intelligence. Sales for the period from July to September were 65.6 billion dollars, 16 percent more than a year earlier. Profits rose 11 percent to $24.7 billion. The results beat Wall Street expectations and Microsoft’s own forecasts. At the same time, Microsoft has shown little sign of slowing down its rapid spending on building data centers for AI work. The company spent $20 billion on capital expenditures, up 79 percent from a year earlier, and said it would spend even more in the current quarter.
Microsoft CEO Satya Nadella said on a call with investors that the company’s business, which enables customers to use AI, will reach more than $10 billion in annual revenue in the current quarter, “the fastest business in our history to achieve this.” the milestone”. Company executives told investors that Microsoft expects sales to be subdued through the end of the year because its available data center capacity is insufficient to meet customer demand. “Obviously we ran into a lot of external constraints because the demand came in pretty quickly,” Nadella said.
The company has made a big bet on artificial intelligence through its investments in the startup company OpenAI. That relationship has “given it an enviable position as a vanguard of new technology,” and Microsoft is stealing share from competitors, Raymond James analysts wrote in a note to investors. Since the summer of 2023, AI has helped stabilize the growth of Microsoft’s cloud computing service, Azure. Last quarter, Azure’s growth was roughly flat at 34 percent, and more than a third of that growth came from artificial intelligence, including selling access to OpenAI’s systems and providing computing power when customers use OpenAI directly from the startup. Azure growth may slow in the current quarter, but pick up in the new year as more data center capacity becomes available, the company said.
Asked about the alleged strain in the relationship, Nadella called the partnership “super beneficial.” He said Microsoft’s early bet paid off. “We’ve effectively sponsored one of the highest-valued private companies today,” he added. Microsoft CFO Amy Hood said the company’s 1, It expects to spend $5 billion in external investments this quarter, “primarily due to our share of the expected loss on OpenAI.” Investors are nervous about Microsoft’s capital spending because they have “limited visibility” into whether and how the spending will yield a solid return. wrote analysts at Bank of America in a recent note.The company does not disclose sales of its own AI assistants, which cost business customers $30 a month, but its revenue from its entire Microsoft 365 commercial cloud, which includes Excel, Teams and Word programs, increased by 15 percent.
The gaming division – which became Microsoft’s largest division to serve consumers – achieved revenue of 5.6 billion dollars, which represents an increase of 44 percent. Last October, the company completed its $69 billion acquisition of game maker Activision Blizzard. “During the quarter, we set a new record for monthly active users as more players are playing our games across devices and the Xbox platform than ever before,” said Nadella.
Source: sg.hu
