(News Bulletin 247) – The two groups published results that exceeded expectations, particularly in their cloud computing divisions. Alphabet explodes in particular, after announcing for the first time in its history the payment of a dividend.

If Meta had a very bad start to the Gafam results season, on Wednesday evening, Microsoft and Alphabet, on the contrary, delighted the market with their quarterly accounts.

“Despite the prevailing macroeconomic malaise, the results of Alphabet and Microsoft shone,” summarizes Stephen Innes of Spi Asset Management.

“Shares of both tech giants surged, injecting a significant dose of optimism into investor sentiment. This positive momentum provided a much-needed boost after Meta’s cautious forecasts,” he adds. .

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Microsoft powered by Azure

Microsoft gained 4.4% in post-market trading on Wall Street, after delivering its third quarter results, with the group closing its accounts at the end of September.

From January to March, the Redmond-based company grew 17% to $61.9 billion and generated earnings per share, the big indicator scrutinized on Wall Street, of $2.94, up 20%. over a year.

According to Wedbush, consensus was calling for revenue of $60.86 billion and earnings per share of $2.82.

In detail, the center of all attention remained Azure, Microsoft’s cloud computing services division, which benefits from numerous generative artificial intelligence (AI) features drawn from the partnership between Microsoft and OpenAI. Clearly, it is in the light of Azure’s growth that the market assesses the tech group’s advance in AI.

However, Azure achieved growth of 31% over the quarter, exceeding market expectations of 29%. CFO Amy Hood told analysts that AI services had a positive impact of seven percentage points.

“Masterpiece after masterpiece”

“More companies are opting for (Azure’s) AI capabilities, which increases deal flow while expanding market share,” notes Wedbush’s Dan Ives.

CEO Satya Nadella said 65% of Fortune 500 companies use AzureOpenAi Services.

Additionally, Microsoft’s fourth-quarter outlook for Azure surprised the market. Amy Hood announced that Microsoft expected growth for this division of between 30% and 31%, when the consensus was only counting on 28.5%.

The financial director also specified that for the financial year ending next year, Microsoft anticipated double-digit growth in its revenues and operating margin, despite greater investments to meet the demand for cloud services and AI products.

“Microsoft continues to deliver masterpiece after masterpiece, with this quarter demonstrating its leadership position in the AI ​​revolution,” praises Dan Ives.

First dividend in Alphabet’s history

If Microsoft impresses the market, what about Alphabet? Shares of Google’s parent company jumped 11.6% in post-market trading after releasing its first quarter results.

“Alphabet experienced its strongest growth in two years, announcing its first dividend as well as a $70 billion share buyback,” summarizes Stephen Innes.

Alphabet has, in fact, sent a message of confidence to its holders by announcing the payment of a coupon (of 20 cents per share). The Mountain View group joins Meta, which also decided, in the previous quarter, to pay a dividend for the first time in its history. Alphabet said it plans to pay a cash coupon each quarter.

These announcements regarding shareholder returns were the icing on the cake. Because the results also proved to be fully satisfactory. Revenues rose 15% to $80.54 billion while earnings per share reached $1.89 from $1.17 a year earlier.

According to an LSEG consensus cited by CNBC, expectations were much lower, at $78.6 billion for revenue and $1.51 for earnings per share.

Google Cloud in good shape

As for Microsoft, the Google Cloud division did not disappoint with revenues of $9.574 billion against a consensus of $9.35 billion, and growth of 28.4%. Bloomberg point out that this progression was supported by the group’s shift into AI.

“The main point is that we are very excited about the benefits of AI for our cloud computing customers,” said Ruth Porat, chief financial officer, as quoted by Bloomberg. “We’ve seen a growing contribution from our AI solutions” and Google Cloud’s results “really reflect the overall strength of the industry,” she added.

Beyond growth, Google Cloud generated an operating profit of $900 million, more than five times more than over the same period of 2023 and significantly above the consensus, of $672 million, according to Bloomberg.

“For years, Google Cloud has been the weak point at Alphabet’s earnings conference,” Lee Sustar, principal analyst at Forrester, told Bloomberg. “The latest results show that Google Cloud’s AI offerings have not only enticed enterprise customers to take a look, but also to spend money,” he continues.

Google Cloud has shown itself to be a strong unit on its own, without having to rely on revenue from the tech giant’s advertising business to cover its operating losses as has been the case in years past, adds the analyst.

Alphabet may be turning things around, with the market having estimated for many months that the group was lagging behind Microsoft and OpenAI in the AI ​​race. This also resulted in fears about the online search engine division, the heart of the group’s reactor. Microsoft has significantly strengthened Bing with AI applications and press reports have reported that OpenAI is working on its own search engine.