Microsoft beat Street’s expectations in its earnings report released Tuesday afternoon, showcasing the early impact of its high-profile commitment to artificial intelligence in its first quarter since bolstering its investment in the firm behind the viral chatbot ChatGPT.
Microsoft’s $52.9 billion in sales and $2.45 earnings per share surpassed analyst estimates of $51 billion and $2.24 per share for the first three months of 2023, according to FactSet, representing modest increases from the prior quarter.
Microsoft’s cloud computing business remains its most prolific unit, generating $22.1 billion in revenue, topping estimates of $21.9 billion.
Shares of the Redmond, Washington-based firm surged 5% in after-hours trading.
Google parent Alphabet also reported earnings after the bell Tuesday, beating on the top and bottom lines as sales and profit came in at $69.8 billion and $15.1 billion. Google posted $40.4 billion in advertising revenue last quarter, declining roughly 5% from its $42.6 billion in sales in the segment the three months prior.
ChatGPT launched with a bang in late November, landing its OpenAI parent a reported $10 billion investment from Microsoft in January. Bard, Google’s answer to ChatGPT, has failed to impress investors to the same degree, with Goldman Sachs and JPMorgan analysts each declaring Microsoft has a clear “lead” in the generative artificial intelligence space. Shares of Microsoft are up 15% since ChatGPT’s debut, compared to a 9% gain for Alphabet.
Traffic for Bing spiked 16% in the six weeks after Microsoft announced it would incorporate ChatGPT into search, according to Sensor Tower data cited by Bank of America.
$2.05 trillion. That was Microsoft’s market capitalization at market close Tuesday, making it the third-most valuable company in the world. Microsoft’s market value is roughly $700 billion more than Alphabet, a gap that was as slim as $300 billion in late 2021.
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