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Last Week’s Highlights
Alphabet announces first-ever dividend
Alphabet, the parent company of Google, announced its first-ever dividend of 20 cents per share, along with a $70 billion stock buyback. The company beat expectations for the quarter in sales, profit, and advertising, with its cloud services growing by 28% in the first quarter due to the increasing adoption of artificial intelligence. The surge in capital expenditures was higher than anticipated, but CFO Ruth Porat expects the expenditures to remain at the same level or higher throughout the year. Despite this, the operating margin in 2024 is expected to be higher than last year.
Microsoft beats quarterly revenue estimates
Microsoft has reported a 17% rise in revenue to $61.9bn in Q3 2022, beating Wall Street estimates and driven by the adoption of AI across its cloud services. The company’s shares jumped over 4% in extended trade, and its market capitalization rose by $128bn. Meanwhile, Facebook and Meta’s market capitalization fell by $200bn on the back of rising AI expenses and a lower-than-anticipated revenue forecast. Microsoft’s AI-driven capital expenditures in Q3 were nearly $1bn more than analysts’ estimates, and its Intelligent Cloud unit revenue rose to $26.7bn, with Azure revenue up 31%.
Coming Up This Week
Intel’s forecast disappoints
Intel has forecast a weak second quarter, with revenue and profit below market estimates, due to weak demand for its traditional data center and PC chips and trailing in the surging market for AI components. The demand for Intel’s central processing units (CPUs) has suffered as businesses have prioritized spending on advanced and speedy artificial intelligence server chips. Nvidia dominates the market for AI chips with its powerful graphics processing units (GPUs) and commanded roughly 80% share last year. Intel’s other largest market – PC chips – has shown some signs of life at the beginning of 2024. Despite the lackluster start, Intel is optimistic about personal computer sales in the second half of the year.
Apple strengthens its AI capabilities
Apple is planning to bolster its AI capabilities ahead of its Q2 conference call. The company is in discussion with OpenAI to integrate AI capabilities into the upcoming iPhone model. Apple has been slow in AI advancements, but is now actively seeking partnerships and acquiring smaller firms to enhance its AI prowess. Recently, Apple acquired Datakalab, a Paris-based AI startup, and DarwinAI. The company has also been exploring a potential collaboration with Alphabet’s Google to leverage the latter’s AI model into its products. It remains to be seen whether Apple partners with Google or OpenAI.
