AI chatbots have generated a lot of talk, but are they generating revenue??
Driving the news: Alphabet and Microsoft dropped their earnings reports for the first full quarter since going all in on AI. Both companies are at the forefront of commercializing generative AI and recently released search engine chatbots.
- As they incorporated more AI into their products over the year, Alphabet and Microsoft also saw their shares explode by 37% and 46.5%, respectively.
- Strength in its cloud services business helped Alphabet beat revenue estimates, while Microsoft saw a slowdown in its own cloud arm, Azure.
But was the stock rally worth the hype? Absolutely, says Wall Street.
...even if there isn't exactly anything to show for it. The tech-heavy Nasdaq closed higher as investors kept the AI party going, but the impact of investments in new AI products likely won’t be felt until at least 2024, according to analysts.
- "When you have this much enthusiasm for a specific investing theme, you don't need much of a reason for markets to move. It's inertia," one strategist told Reuters.
Bottom line: For now, good ol’ fashioned revenue streams like services and ads are still the key determinants of revenue. Meta, completing the trio of legacy tech companies trying to become AI disruptors, will report its earnings later today.—QH