Microsoft pressurized to show ROI on AI investments, but it's not a straight road

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Key notes

  • It can be difficult to determine the revenue generated by AI due to its integration with various products.
  • The lack of transparent AI revenue figures reflects the early days of cloud computing, where companies initially resisted disclosing dedicated figures.

After a year of heavily investing in AI and making bold promises, tech companies face pressure to prove their financial worth. This week’s earnings reports from Microsoft and Alphabet, major players in AI, will be closely watched for signs of concrete returns.

The lack of transparent AI revenue figures reflects the early days of cloud computing, where companies initially resisted disclosing dedicated figures. Experts anticipate similar challenges for AI metrics to measure the effectiveness of investments.

It can be difficult to determine the revenue generated by AI due to its integration with various products. Unlike Nvidia, where AI is directly linked to chip sales, Microsoft and Alphabet’s AI is embedded, making it harder to track. Although Google’s cloud division shows potential and Microsoft provides some insights, more must be done to justify the billions invested in AI.

Microsoft appears more ready than its competitors to incorporate OpenAI’s technology into its products. Their AI-powered assistant, Copilot, is an early opportunity for monetization. The performance of this tool could provide essential data on the adoption of AI tools and contribute to Microsoft’s recent $3 trillion market capitalization, which has been fueled in part by high expectations for AI.

On the other hand, Google is playing catch-up with initiatives like a chatbot, investments in rival Anthropic, and its new Gemini language model. However, they must demonstrate how these efforts translate into financial gains. Analysts estimate potential revenue from licensing Gemini, but concrete results are needed.

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