Review | Behind the Super-Expected Performance, Where Will FAMG's AI Long March Go?

Alphabet-C, Microsoft, Amazon, and Meta all exceeded expectations in the first quarter.

In the cloud business, Alphabet-C finally turned losses around and achieved its first profit, while Microsoft and Amazon both saw a narrowing of year-on-year growth rates, with Amazon releasing a pessimistic outlook reflecting the intense competition in the industry. In another major business, advertising, both Alphabet-C and Meta stated that customer budgets remained weak, while Amazon stood out alone.

Looking ahead, the AI wars of the giants are a long march. Alphabet-C has been deeply involved in AI for many years, while Microsoft has a rich portfolio of commercial office products, making generative AI a better practice for empowering productivity. Amazon's increased investment in AI in its advertising business has shown initial results, and Meta also has its own strong players. Let's see if they can focus well.

Alphabet-C: Revenue and profits exceeded expectations, breaking the trend of four consecutive quarters of decline, and achieving its first profit in the cloud business.

The biggest highlight of Alphabet-C's financial report was the first profit in its cloud business. Alphabet-C's cloud has seen a three-year increase in large contracts of 300%, including 60% of the world's top 1000 enterprises. The AI-as-a-service business has also benefited from this wave of AI, in stark contrast to Amazon AWS's declining operating profit margin and pessimistic guidance.

Although the performance of the advertising business was better than expected in the economic downturn, there is still no turning point in overall online advertising spending. Alphabet-C continues to buy back shares in a high-interest-rate environment, highlighting its financial strength and confidence in future development.

In terms of AI, Alphabet-C stated that it will focus on search and empowering productivity, promote the merger of Alphabet-C Brain and DeepMind, and concentrate its firepower to resist OpenAI. The AI chip TPU has developed to the fourth generation since its use in Alphabet-C's cloud in 2015, and is currently used to train large models such as PaLM with 540 billion parameters.

Microsoft: In the midst of cheers for AI, performance still needs to return to the fundamentals of core business.

Microsoft's revenue and profits exceeded expectations for the quarter. The biggest highlight of the financial report was the intelligent cloud business, including Azure, which exceeded expectations. Although Azure maintained growth under economic pressure, the growth rate narrowed, which indirectly proves the strong momentum of Alphabet-C's cloud, especially in AI business. Microsoft is very optimistic about its own AI development. Although Microsoft took the lead in the GPT battle, the AI war is a long march. In addition, Alphabet-C, FB and other companies have been deploying for many years, with abundant talents and considerable strength. However, relying on its rich portfolio of commercial office products, Microsoft's generative AI empowers productivity, which is a better practice.

The company also announced that it will increase investment in OpenAI's cloud business and integrate GPT into Bing. The new Bing is like old wine in a new bottle, with a huge gap in market share compared to Alphabet-C and a smaller revenue share, which has limited impact on the company.

Amazon: Revenue exceeds expectations, but cloud business pessimistic guidance triggers stock price decline

The biggest highlight of Amazon's first quarter was that AWS exceeded expectations. However, like Microsoft Azure, the growth rate is slowing down, and coupled with the management's release of pessimistic guidance. AWS is the company's main source of profit, but the operating profit margin continues to decline, reflecting the white-hot competition in the industry, and also confirming that it is difficult to resist under the force of Alphabet-C. However, the advertising business is a pearl in the sea, with better-than-expected performance.

Amazon has obviously invested less in AI than Alphabet-C, Microsoft, and FB, but it has also launched AI training and inference chips and integrated them into AWS. The company also mentioned that it will put more resources into AI through AWS, reduce logistics business expenses, and empower customers in the development of large models and generative AI. At the same time, it will also iterate the existing large models of ALEXA and continue to increase investment in AI in the advertising business.

Meta: Chinese sellers help reverse advertising revenue, but can continue to bet on the metaverse to turn the tide?

Meta's first-quarter revenue, profit, and guidance all exceeded expectations. The biggest highlight of the first quarter was that revenue reversed after three consecutive quarters of decline, and Chinese advertisers played a key role. However, whether this situation is short-lived remains to be seen.

In addition, let's see if Reels short videos can break through and grow. The company was previously affected by privacy and other issues, coupled with heavy losses in the all-in metaverse, and it is urgent to cut costs to defend profits. Standing at the crossroads of strategic adjustment, whether the company can continue to bet on the metaverse and AI to turn the tide remains to be seen.

In terms of AI layout, Meta also has strong players, including Yann LaCunn, one of the authoritative figures in AI and a Turing Award winner. The company's development in AI mainly depends on whether it can focus well.