February 23, 2024

Microsoft & Google’s Cloud Revenue Boosted By Generative AI

Although both Microsoft and Google had faced temporary dips in cloud revenue, the reports for the last quarter show a massive rise in profits, all thanks to generative AI.

The two tech giants made their revenue reports for the December quarter of 2023 public on Tuesday and the numbers look very promising.

Lee Sustar, the principal analyst at Forrester said that the last quarter’s profits not only helped Google make up for all the losses in the previous quarters but the revenue from Google Cloud now accounts for 10% of the total revenue generated by Alphabet— Google’s parent company.

Google Cloud reported a total revenue of $9.19 billion for the last quarter which is 28% more than the previous quarter. For the same quarter, Alphabet reported a total revenue of $86 billion.

Microsoft too has reported similar numbers. Its cloud tools (Azure and other SaaS products) together generated a total revenue of $33 billion which is 24% (22% in constant currency) more than the previous quarter.

By infusing AI across every layer of our tech stack, we are winning new customers and helping drive new benefits and productivity gains.Satya Nadella, Microsoft CEO

What’s New With Google and Microsoft?

Seeing how AI has benefited the company in the last quarter, Google has smartly decided to pair its Bard chatbot with the new Gemini Pro model.

According to Nadella, there are 53,000 Azure customers, out of which 33% are new users who have opted for the service in the last 12 months.

If you didn’t know, Gemini is the first model to outperform human experts in MMLU (Massive Multitask Language Understanding). As of now, the product is expected to support more than 40 Global languages which include Japanese, Arabic, Chinese, Dutch, French, and so on.

On top of that, Google is also planning to add image generation support which will allow users to create images through texts typed in the chat. Right now the feature will only be available for English speakers.

AI has drastically increased Google’s user base. CEO Sundar Pichai said that while cost optimization strategies were helping them stay afloat during the macroeconomic headwinds, it’s providing better AI services that helped them bring in new customers.

Microsoft on the other hand managed to revive its struggling cloud services by offering an array of AI features. Integration with OpenAI and ChatGPT was a huge step towards this success.

Many other services such as Microsoft 365 and Azure also went through a makeover with Copilot—an AI-based chatbot.

The last year saw rapid advancement with AI. The collaboration of Microsoft and OpenAI was a huge trigger that left all other competing tech companies to launch their own chatbots.

Now that the financial reports of both Google and Microsoft are out, it would be interesting to see whether Amazon’s AWS platform (that launched its own AI model to compete with Microsoft) made similar profits.

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