Both companies are investing heavily in AI and it’s that investment which is driving their growth and that helped both to outpace market expectations, especially following Meta’s results which disappointed investors and analysts.
Meta’s CEO, Mark Zuckerberg, said that AI spending would have to grow significantly before Meta could make much revenue from its products and it was that admission that the company would need to boost investment in AI that ‘spooked’ investors, especially after promising to take action on the company’s costs back in 2023. Zuckerberg said that he’d be looking to raise investment from $37bn to $40bn over the coming year.
For Alphabet and Microsoft their billions of dollars in investment are certainly paying off. Microsoft’s cloud computing revenue jumped by over 20% in the last quarter, for example, and it has just signed a five-year deal with Coca-Cola to supply AI and cloud computing services.
AI is certainly a costly bet and the investments that must be made are huge. This is being described as an ‘arms race’ between these companies as they look to exploit the huge opportunities associated with AI – and most analysts are predicting that spending will have to remain aggressive going forward. These companies are going to need some very deep pockets indeed!
