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Business News/ Technology / News/  Tech CEOs wax poetic on AI, big adds to sales will take time
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Tech CEOs wax poetic on AI, big adds to sales will take time

Tech giants Google and Microsoft have launched a number of products that they promise are packed with generative AI, which creates brand new content - text, images, code - from past data.

With quarterly reporting season just under way, the term 'AI' has been used nearly twice as frequently in the conference calls of S&P 500 companies as it was in the previous quarter (REUTERS)Premium
With quarterly reporting season just under way, the term 'AI' has been used nearly twice as frequently in the conference calls of S&P 500 companies as it was in the previous quarter (REUTERS)

Microsoft Corp and Google-parent Alphabet Inc talked up investments in artificial intelligence (AI) for the second quarter in a row but their results on Tuesday suggested that any substantial additions to sales will be slow.

The tech behemoths have launched an array of products that they promise are packed with generative AI, which creates brand new content - text, image, code - from past data. The term became a buzzword after Microsoft-backed firm OpenAI released ChatGPT, a chatbot that writes human-like responses.

Also Read: Google, Microsoft top expectations as AI rivalry heats up

"The world's most advanced AI models are coming together with the world's most universal user interface - natural language - to create a new era of computing," Satya Nadella, Microsoft's chief executive officer, said in a statement on Tuesday. (Graphic: Alphabet and Microsoft talk up AI, https://www.reuters.com/graphics/USA-STOCKS/AI/lgvdkajbepo/chart.png)

With quarterly reporting season just under way, the term "AI" has been used nearly twice as frequently in the conference calls of S&P 500 companies as it was in the previous quarter, a Reuters analysis showed.

Google used the term 52 times on its first-quarter call on Tuesday, up from 45 in the fourth quarter. Microsoft said it 36 times, versus 20 - not including references to its partner OpenAI.

Both companies said AI was already juicing sales, but neither said when or if they would start breaking out any sales, costs, or profits from the technology.

"Lots more to come," Alphabet boss Sundar Pichai said on Tuesday, after he mentioned some of the products the company launched last month, including Bard, Google's answer to ChatGPT-powered Microsoft search chatbot Bing.

Google, which has also unveiled a flurry of AI tools for its email, collaboration and cloud software, reported quarterly profit and revenue above estimates and said it would buy back $70 billion in stock.

It said last week it would combine its AI research units Google Brain and DeepMind and work on "multimodal" AI, like OpenAI's latest model GPT-4, which can respond not only to text prompts but to image inputs as well to generate new content.

"I mean the announcements are there and things will move quickly. But I think it's going to take some time to see real meaty results," said Thomas Martin, a senior portfolio manager at Globalt Investments.

"As far as working it into actual numbers ... think about how long it took for Google to break out YouTube just as an example," he said, adding that anything significant was unlikely to show up on statements for more than a year.

Brett Iversen, Microsoft's head of investor relations, told Reuters, however, that "it's really early" and that AI was still a relatively small part of Microsoft's total business. (Graphic: AI dominates quarterly conference calls, https://www.reuters.com/graphics/USA-STOCKS/AI/gdvzqbkgmpw/chart.png)

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Nadella said in the three months since Microsoft made a new AI "Copilot" developer tool broadly available, over 10,000 organizations had signed up, including Coca-Cola and General Motors. The tool is for its product suite that includes Word documents, Excel spreadsheets, and Outlook emails.

Microsoft beat estimates for quarterly revenue and profit on Tuesday, driven by growth in its cloud computing and Office productivity software businesses.

Bing has lagged Google search for decades but Nadella said that Bing downloads had jumped since the addition of AI features and now had 100 million daily users.

"Ultimately, it may be a much larger of an impact to Microsoft's enterprise software and perhaps less so in search," said Haruki Toyama, portfolio manager at Madison Investments.

Toyama said Google already used AI to monetize their search algorithms and he did not expect AI advances from its rivals to be as much of a threat as some thought.

Meta Platforms Inc, which reports results on Wednesday, and Amazon.com Inc, which reports next week, have also jumped onto the AI bandwagon.

Meta, which has admitted it is playing catch-up in AI, has published an AI model that can pick out individual objects from within an image. Amazon's cloud division AWS, the world's largest, has released a suite of technologies aimed at helping other companies develop their own chatbots backed by AI.

Shares in Meta and Amazon rose 2.3% and 5.3% on Tuesday after market, respectively.

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This story has been published from a wire agency feed without modifications to the text.

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Published: 26 Apr 2023, 07:56 AM IST
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