(Bloomberg) — Microsoft Corp., Alphabet Inc.’s Google and Advanced Micro Devices Inc. — three companies working harder than almost any other to incorporate artificial intelligence into their products — are finding that the technology is It is difficult to meet the expectations of investors.
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Shares of the tech giant fell in New York trading on Wednesday, the day after reporting results for the last three months of 2023 and forecasts for the current quarter. Microsoft fell 1.6%. Google fell 6.7%, and AMD fell 5.5%.
All three had worked hard to highlight progress on AI. In the case of AMD, the company predicted that its new AI processors would generate even higher sales than expected. Microsoft highlighted how users are adopting its AI assistants, and Google said the technology is improving its search and cloud computing services.
But investors had bid up the companies’ shares to record highs in recent weeks, betting that AI bonuses would sharply boost results. What they heard Tuesday wasn’t enough to satisfy those hopes.
“Companies are constantly having to prove themselves and constantly prove the value proposition of AI,” Katrina Dudley, portfolio manager and analyst at Franklin Templeton, said on Bloomberg Television.
Microsoft and Google, two rivals in AI software and cloud computing, delivered mostly good news in their report — but still received enthusiasm from investors.
At Microsoft, revenue grew at the fastest rate since 2022, partly driven by AI products helping drive adoption of its data-center services. Revenue from its Azure cloud-services unit rose 30%.
Chief Financial Officer Amy Hood said AI demand drove growth by 6 percentage points. It was over 3 percentage points…