Cloud services from Microsoft and Google rely on the success of AI tools, but the shares of both companies are steadily declining. Major AI investments before 2024 could put an end to them.

Like many other companies, tech giants Microsoft and Google are doing everything they can to bring the most advanced AI products to market. The (over)supply of AI products led to greater demand for cloud products from both Microsoft and Google. Both companies therefore recorded an increase in their sales figures. Tech giants Microsoft and Google’s AI plans go far, impacting their stocks with a decline of 1 percent and almost 6 percent, respectively.

Promising quarterly figures

Thanks to its close collaboration with OpenAI, Microsoft has made a name for itself on the AI ​​map. The company reported its strongest revenue growth since 2022, with a 24 percent increase in commercial cloud revenue. The high interest in AI products is driving greater demand for Microsoft services such as storage and computing power.

Thanks to its Google Cloud division, Alphabet once again achieved better quarterly figures in the last quarter of 2023. Compared to the previous year, this cloud service achieved an increase in sales of almost 26 percent. It is the first time in a year that Alphabet has not made a loss on its cloud products. In the last quarter of 2022, the company still had to post a loss of $186 million, but from 2023 onwards it only posted a profit (for the first time).

Stocks fall

Although the quarterly results look promising on paper, investors are finding that this trend isn’t continuing in stocks. Despite rising cloud computing sales (thanks in part to OpenAI technology), Microsoft shares fell 1 percent. Alphabet shares also fell by almost 6 percent.

Although both tech giants, Google and Microsoft, posted strong quarterly results, current investors are not convinced that this trend will continue. The warning from Google and Microsoft that major investments will be made in 2024 in order to continue investing in the technological infrastructure for generative AI may have played a role.