How Facebook’s parent company Meta may be “years ahead” of Google and Microsoft

29th April, 2024
How Facebook’s parent company Meta may be “years ahead” of Google and Microsoft

Alphabet and Microsoft excelled in the first quarter of the year due to their investments in AI. While Alphabet’s market value exceeded $2 trillion, Microsoft intends to boost its AI spending. Both firms prioritize research, infrastructure, and strategies for future growth.

Alphabet and Microsoft recently disclosed their Q1 results, surpassing revenue and earnings estimates, attributing their success to AI investments. Conversely, Meta CEO Mark Zuckerberg anticipates delayed profits from Gen AI, contrasting with the upbeat sentiments from Alphabet and Microsoft.

Google and Microsoft post ‘AI-charged’ Q1 2024 results

Alphabet saw a 10% rise, crossing the $2 trillion market value mark with an impressive gain of approximately $180 billion. Microsoft also experienced a nearly 3% increase, adding over $80 billion to its market value.

Both companies heavily invested in AI infrastructure, leading to exceeding revenue growth projections. Microsoft reported $21.9 billion in profits, a 20% year-over-year increase, while Google’s parent company reported $23.7 billion in profits, a notable 57% increase from the previous fiscal year.

DA Davidson analyst Gil Luria noted the disparity, stating, “Meta suggests that increased investment results may be years away, while Microsoft and Google are already demonstrating them.”

Microsoft’s 12-month forward price-to-earnings ratio stands at 30.40, compared to Alphabet’s 21.63.

Microsoft, Google and Meta to invest more in AI

Despite positive indications of the AI shift from Google and Microsoft, Zuckerberg maintains a cautious stance regarding revenue from Gen AI, hinting at prolonged investment in its development.

Alphabet CEO Sundar Pichai highlighted the company’s strong performance in Search, YouTube, and Cloud, emphasizing six key areas of focus: research leadership, infrastructure, search innovation, global product reach, execution speed, and monetization strategies.

Microsoft CFO Amy Hood affirmed a significant increase in capital expenditure on AI.