Alphabet and Microsoft AI bets fuel growth

Strong earnings from Alphabet and Microsoft, fueled by significant AI investments, sparked a rally in technology stocks on Friday, despite Meta Platforms' reduced forecast.

According to LSEG data, Alphabet surged 10% and closed with a stock market value of more than $2 trillion for the first time, after the company sweetened the pot for investors with its first dividend and a $70 billion share buyback.

According to the LSEG Datastream, the fourth most valuable company in the world toyed with reaching the milestone more than three years ago on an intraday basis.

Microsoft's market value increased by roughly $54 billion, and it saw a gain of almost 2%.

As more people flocked to services like the Copilot AI assistant and the Gemini chatbot, Alphabet and Microsoft announced that their quarterly revenue growth was exceeding expectations, despite having invested billions of dollars in the infrastructure required to support AI applications.

According to finance chief Amy Hood, 7 percentage points of the 31% increase in revenue at Microsoft's Azure cloud computing platform between January and March came from AI services.

The demand for AI in the near future, she continued, was a little bit higher than the company's capacity, which hindered growth in the quarter and underlined the necessity of investing in infrastructure expansion.

Cloud revenue at Google increased by roughly 28% thanks to robust growth in Google Workspace, where the Alphabet subsidiary provides a variety of AI features driven by its massive language model, Gemini.

The social media giant Meta warned of higher spending and slower-than-expected growth, which caused its stock to plunge 10% on Thursday. These results stood in stark contrast to theirs.