Volkswacht Bodensee - Google-parent Alphabet soars as rivals stumble over AI costs

The earnings come as AI titans pump billions of dollars into cloud computing and artificial intelligence, vying to lead in technology that they insist will transform all aspects of life.

Shares in Alphabet rose by more than six percent in after-hours trading as investors lauded the company's success in making the pivot to AI and solid revenue across its major divisions.

The tech giant reported that it made a profit of $62.6 billion on revenue just shy of $110 billion, easily eclipsing the same period a year earlier and beating market expectations.

Shares of Alphabet, maker of Gemini AI, have risen 26 percent in the past six months while rivals Meta and Microsoft have watched their shares dive nearly 11 percent and 22 percent respectively in the same period.

Social media behemoth Meta meanwhile saw its shares slide by more than six percent, despite topping earnings expectations for the recently ended quarter.

Meta sent tremors through its results by announcing that expenses at the tech giant notched up to $33.4 billion as it chases "superintelligence" through major infrastructure buys, and went on a hiring spree for top AI talent.

The company reported a profit of $26.8 billion on revenue of $56.3 billion in the quarter.

The AI investment from the company that owns Instagram and Facebook is not directly tied to a revenue stream as with Amazon, Microsoft and Google, which sell their AI-powered cloud services to clients worldwide.

Many analysts expect Meta to make its investments pay off by improving advertising efficiency and creating new opportunities, such as with its smart glasses through a partnership with Ray-Ban maker EssilorLuxottica.

- Stock drops -

While investors are wary of whether spending fortunes on AI is financially shrewd, companies insist it is justified by seemingly insatiable demand, a position Wall Street mostly supports even if shares in some of the tech giants have struggled in recent months.

Microsoft also reported quarterly revenue and earnings ahead of Wall Street expectations Wednesday, powered by demand for cloud computing and artificial intelligence services that drove revenue.

The tech giant posted revenue of $82.9 billion for the quarter ended March 31, up 18 percent from a year earlier and topping analyst consensus forecasts. Net income climbed 23 percent to $31.8 billion.

But the company founded by Bill Gates saw its shares drop by more than two percent.

Amazon meanwhile reported a sharp rise in first-quarter profit, saying that its investment in artificial intelligence startup Anthropic supercharged the bottom line.

The Seattle-based e-commerce and technology colossus said net profit jumped to $30.3 billion in the three months ended March 31, nearly doubling from $17.1 billion a year earlier. The results included $16.8 billion in pre-tax gains from Amazon's stake in Anthropic.

Amazon shares were down two percent.

A.Kunz--VB