Google, Microsoft Are Spending Massively on AI, Quarterly Earnings Show (apnews.com) 37
This week Alphabet CEO Sundar Picahi assured investors that their long-term AI focus and investment (and a "commitment to innovation") "are paying off," reports the Associated Press. Alphabet's stock has already soared 20% this year, and it's "still thriving" as the company "navigates through a pivotal shift to AI and battles regulators..."
Alphabet earned $26.3 billion, or $2.12 per share during the most recent quarter, a 34% increase from a year ago. Revenue rose 15% from the same time last year to $88.27 billion... The profits would have been even higher if Google wasn't pouring so much money into building up its AI arsenal in a technological arms race that includes other industry heavyweights Microsoft, Amazon, Apple, Facebook parent Meta Platforms and rising star OpenAI. The AI investments are the primary reason Google's capital expenditures in the past quarter soared 62% from the same time last year to $13.1 billion. The AI spending will likely stay at roughly the same level during the current October-December period, and the rise even higher next year, according to Anat Ashkenazi, Alphabet's chief financial officer.
But Ashkenazi also emphasized the Mountain View, California, company will act on cost-cutting opportunities in other areas to help boost profits. Alphabet already has trimmed its payroll from more than 190,000 worldwide employees early last year to about 181,000 workers now. In an example of how AI can perform tasks that once required human brainpower, Pichai said the technology is now writing more than 25% of the company's new computer coding.
After the results, investors sent Alphabet's stock price up 5% in extended trading, the article points out. "Both Alphabet's profit and revenue increased at a brisker pace than industry analysts anticipated, thanks primarily to a moneymaking machine powered by Google's ubiquitous search engine... [Google's digital search-engine ads earned $49.39 billion, 12% more than the same quarter of 2023.] And Google's cloud division is growing at an even more robust rate, thanks to demand for AI services. The cloud division generated $11.35 billion in revenue during the past quarter, a 35% increase from last year."
And meanwhile over at Microsoft, quarterly sales surged 16% to $65.6 billion, reports the Associated Press. But again, "the company sought to assure investors its huge spending on artificial intelligence is paying off." The company has spent billions of dollars to expand its global network of data centers and other physical infrastructure required to develop AI technology... As a result, AI-related products are now on track to contribute about $10 billion to the company's annual revenue, the "fastest business in our history to reach this milestone," CEO Satya Nadella said on a call with analysts Wednesday. [Though Microsoft "hasn't yet formally reported revenue specifically from AI products," the article notes later, with Microsoft instead saying it's infused AI and Copilot into all its business segments.]
Just in the last quarter, Microsoft spent $20 billion "mostly for its cloud computing and AI needs," the article points out.
But there's still making plenty of money... The software maker also reported an 11% increase in quarterly profit to $24.7 billion, or $3.30 per share, which beat Wall Street expectations for the July-September period... Leading in sales for the quarter was Microsoft's productivity business segment, which includes its Office suite of email and other workplace products, growing 12% to $28.3 billion. Microsoft's cloud-focused business segment grew 20% from the same time last year to $24.1 billion for the three months ending Sept. 30. Its personal computing business, led by its Windows division, grew 17% to $13.2 billion. A big part of that growth came from Microsoft's Xbox video game business, which was boosted by its purchase of game publishing giant Activision Blizzard a year ago.
But Ashkenazi also emphasized the Mountain View, California, company will act on cost-cutting opportunities in other areas to help boost profits. Alphabet already has trimmed its payroll from more than 190,000 worldwide employees early last year to about 181,000 workers now. In an example of how AI can perform tasks that once required human brainpower, Pichai said the technology is now writing more than 25% of the company's new computer coding.
After the results, investors sent Alphabet's stock price up 5% in extended trading, the article points out. "Both Alphabet's profit and revenue increased at a brisker pace than industry analysts anticipated, thanks primarily to a moneymaking machine powered by Google's ubiquitous search engine... [Google's digital search-engine ads earned $49.39 billion, 12% more than the same quarter of 2023.] And Google's cloud division is growing at an even more robust rate, thanks to demand for AI services. The cloud division generated $11.35 billion in revenue during the past quarter, a 35% increase from last year."
And meanwhile over at Microsoft, quarterly sales surged 16% to $65.6 billion, reports the Associated Press. But again, "the company sought to assure investors its huge spending on artificial intelligence is paying off." The company has spent billions of dollars to expand its global network of data centers and other physical infrastructure required to develop AI technology... As a result, AI-related products are now on track to contribute about $10 billion to the company's annual revenue, the "fastest business in our history to reach this milestone," CEO Satya Nadella said on a call with analysts Wednesday. [Though Microsoft "hasn't yet formally reported revenue specifically from AI products," the article notes later, with Microsoft instead saying it's infused AI and Copilot into all its business segments.]
Just in the last quarter, Microsoft spent $20 billion "mostly for its cloud computing and AI needs," the article points out.
But there's still making plenty of money... The software maker also reported an 11% increase in quarterly profit to $24.7 billion, or $3.30 per share, which beat Wall Street expectations for the July-September period... Leading in sales for the quarter was Microsoft's productivity business segment, which includes its Office suite of email and other workplace products, growing 12% to $28.3 billion. Microsoft's cloud-focused business segment grew 20% from the same time last year to $24.1 billion for the three months ending Sept. 30. Its personal computing business, led by its Windows division, grew 17% to $13.2 billion. A big part of that growth came from Microsoft's Xbox video game business, which was boosted by its purchase of game publishing giant Activision Blizzard a year ago.
Absolute Idiocy (Score:2)
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The consumer always pays the price
Good luck with getting the unemployable masses to pay “the” price. With fucking what? Blood from a UBI stone? Hilarious,
The CYA begins -- cover-up actual AI revenue (Score:3)
Glad the summary pointed out that MS hasn't yet formally reported revenue specifically from AI products. Based upon anecdotal reports I've seen on experience buying 365 products, MS is pricing AI combined in a way that it is cost advantageous to get the AI offering.
Anyone at Slashdot dealing with large contracts have additional anecdotal reports on how MS or Google is shoving their AI products in with the stuff folks want to buy?
Re:The CYA begins -- cover-up actual AI revenue (Score:4, Insightful)
it looks like pretty soon everything microsoft offers will have AI injected into it, so they can happily say it makes 90% of their profits even though nobody bought anything to actually use its AI features. Good for them I guess? I'm not really sure?
Re: The CYA begins -- cover-up actual AI revenue (Score:2)
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Hmm. My take is the latest announced cost-hikes on o365 are there to cover for the massive losses "AI" will bring and already brought.
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My take is the latest announced cost-hikes on o365 are there to cover for the massive losses
Capitalism doesn't work that way.
A company can't just arbitrarily raise prices to make more money.
If MS could make more money at a higher price, it would already be doing it.
When a product is priced to optimize profit, a higher price reduces market share and decreases profit.
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My take is the latest announced cost-hikes on o365 are there to cover for the massive losses
Capitalism doesn't work that way.
A company can't just arbitrarily raise prices to make more money.
If MS could make more money at a higher price, it would already be doing it.
When a product is priced to optimize profit, a higher price reduces market share and decreases profit.
Yes it can raise prices arbitrarily when there is a significant cost and effort to moving off a platform (Vendor lock-in). For example, Broadcom had to raise prices significantly on VMWare software to motivate their small VMware customers to leave.
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Yes it can raise prices arbitrarily when there is a significant cost and effort to moving off a platform (Vendor lock-in).
If MS can do that, then IT WOULD HAVE ALREADY DONE IT. It wouldn't wait until they had some sunk cost to recoup.
Here's a conversation that has never happened:'
Marketing manager: "Our testing shows that we could raise prices 40% and only lose 20% of our customers."
CEO: "Well, that would mean higher profits, but we don't really need the money right now, so let's wait until our costs go up."
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You seem to be unaware of the concept of a "monopoly". Look it up. In addition, raising prices is very much also a political decision and one of strategic planning vs. short-term profits. Shifts in perception can happen and frequently delusion and wishful thinking plays a role. So far, MS has carefully managed to set prices to the max that would not piss off people enough for them to seek alternatives.
Program code is a liability (Score:4, Interesting)
In an example of how AI can perform tasks that once required human brainpower, Pichai said the technology is now writing more than 25% of the company's new computer coding.
What I see in that is their future support cost just got blown up 25% because of "AI". While a feature in a program is an asset, the code itself is a liability. Code needs to be maintained, more code for implementing the same feature just means more resources to spend supporting it down the road.
Unless AI can write programs that are more lean than human programmers, having AI write code is as useful as having AI write your company's Employees' Handbook and Code of Conduct. It is more junk for humans to revise.
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This asshole is probably unaware that the largest cost of software is maintenance and that will very likely go up massively with AI "written" code, or he is trying to cover up his bad decisions. The reports on non-uniform coding styles and other bad practices by AI are increasing.
Assuming they can get it working (Score:4, Insightful)
We are talking about a technology that could potentially replace all of your most expensive employees except a very very tiny handful to keep the tech going.
Imagine you're a technocrat. You know you're dependent on the unwashed masses and you don't particularly like it. Now there's light at the end of that tunnel. You could potentially abandon 98% of the population as completely unnecessary. The techno-feudal future they're all dreaming of.
Of course for all of us that's going to suck balls but we'll do what we always do and convince ourselves that that quote from George Carlin was actually "it's a big club and you're totally in it!"
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I'm smart enough to know I'm at the bottom (Score:2)
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Of course the executives and the board are irreplicable.
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Imagine you're a technocrat. You know you're dependent on the unwashed masses and you don't particularly like it. Now there's light at the end of that tunnel. You could potentially abandon 98% of the population as completely unnecessary. The techno-feudal future they're all dreaming of.
True... but they fail to realize is that if it does actually result in AGI then the "unwashed masses" can get rid of 100% of the wannabe feudal lords.
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They cannot get it working. Not better than it is working now. And it may well degrade over time because the training data will get worse.
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It's worth trillions. And since we've basically given a handful of corporations virtually all of the money in civilization it's not hard for them to throw money and insane quantities at the problem. We are talking about a technology that could potentially replace all of your most expensive employees except a very very tiny handful to keep the tech going. Imagine you're a technocrat. You know you're dependent on the unwashed masses and you don't particularly like it. Now there's light at the end of that tunnel. You could potentially abandon 98% of the population as completely unnecessary. The techno-feudal future they're all dreaming of.
Imagine you’re a selfish executive who cannot see past the next fiscal quarter who is only focused on increasing stock price, and you’re hell bent on championing the very technology that could make 98% of your revenue stream disappear.
At some point, Greed is gonna get slapped in the face with one glaring reality; that stock price and your paycheck, is only sustained by an employed society. You’d have to be some kind of special fucking idiot to assume the unemployable masses that represent
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It's worth trillions. And since we've basically given a handful of corporations virtually all of the money in civilization it's not hard for them to throw money and insane quantities at the problem. We are talking about a technology that could potentially replace all of your most expensive employees except a very very tiny handful to keep the tech going. Imagine you're a technocrat. You know you're dependent on the unwashed masses and you don't particularly like it. Now there's light at the end of that tunnel. You could potentially abandon 98% of the population as completely unnecessary. The techno-feudal future they're all dreaming of. Of course for all of us that's going to suck balls but we'll do what we always do and convince ourselves that that quote from George Carlin was actually "it's a big club and you're totally in it!"
I keep wondering how these top-down thinkers are going to continue to function once they've eliminated 94-98% of the workforce. I know they've been preaching trickle-down for almost fifty years now, but the truth is our economy is bottom-up. We need money at the bottom rung to feed upwards. If there's no money there because they are no longer exploitable for work, who is going to be paying the top-brass to be top-brass? Who is going to buy goods when most of the population has zero income?
AI coding works for small things (Score:3)
AI may be writing 20% of the code, but how much of that makes it to a product?
I use AI generated code to quickly write up some demo code to check things out, like new APIs and whatnot. "Write a C# windows app to list all attached USB devices using the WMI API". It can type that up much faster than I can, and usually does a decent job for those trivial demos. Those demos let me see and interact with the code to help me understand it more.
I'll then cut and paste bits of that code into my application. If you try to ask AI to write the app, it fails miserably. You'll spend more time detailing it or correcting it than if you just write it yourself.
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If you try to ask AI to write the app, it fails miserably. You'll spend more time detailing it or correcting it than if you just write it yourself.
Just like social media, keeping you engaged. If you can avoid social media then you can avoid AI. And AI is incorrect term to call it anyway.
My AI-driven toothpick will be disrupting (Score:5, Funny)
the entire toothpick industry and nothing will be the same again.
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the entire toothpick industry and nothing will be the same again.
Well..yeah. AI is ultimately creating the unemployable class. The concept of human employment and capitalism will never be the same again when most everyone is drawing a UBI paycheck.
I feel if Greed were to put AI in a toothpick, the end goal would somehow be a toothless society.
Yeah right (Score:2)
"writing more than 25% of the company's new computer coding." - BULL ... SHIT
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"writing more than 25% of the company's new computer coding." - BULL ... SHIT
Don't worry. (Kind of.) Those numbers will only be used as a bullshit defense in court.
I hope you didn’t assume Greed N. Corruption was not going to find a way to blame the machine when shit goes bad. For anything and everything.
Disaster waiting to happen (Score:2)
the technology is now writing more than 25% of the company's new computer coding
I can't wait for the next massive security or device-bricking fuck-up to watch the Google execs claiming they're investigating what happened because they don't have a clue what the code does anymore.
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the technology is now writing more than 25% of the company's new computer coding
I can't wait for the next massive security or device-bricking fuck-up to watch the Google execs claiming they're investigating what happened because they don't have a clue what the code does anymore.
LOL. Those will be the same executives trying to figure out the “error” in the payroll department. After AI “fixed” the financial problem of pointless executives.
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LOL. Those will be the same executives trying to figure out the “error” in the payroll department. After AI “fixed” the financial problem of pointless executives.
So long as AI doesn't mess with my red stapler.