Latest news with #DeborahMarySophia
Time of India
6 days ago
- Business
- Time of India
Google parent Alphabet surprises with capital spending boost after earnings beat
By Kenrick Cai and Deborah Mary Sophia Alphabet on Wednesday cited massive demand for its cloud computing services as it hiked its capital spending plans for the year to about $85 billion and predicted a further increase next year. The search giant strongly beat Wall Street estimates for quarterly revenue and profit on the back of new AI features and a steady digital advertising market. Revenue growth was driven by Google Cloud's sales, which surged nearly 32%, well above estimates for a 26.5% increase. "With this strong and growing demand for our Cloud products and services, we are increasing our investment in capital expenditures." CEO Sundar Pichai said in an earnings release. Shares of the company, which have risen more than 18% since its previous earnings report in April, dipped initially in extended trading after the report before rallying as executives shared details about strong cloud demand on a call with analysts. But investors were surprised by the planned capital spending increase. "I don't think anyone was expecting a change to that 2025 capex guide," said Dave Wagner, portfolio manager at Aptus Capital Advisors. "Google had an amazing quarter. It was an easy beat, and it was just offset by this $10-billion increase in capex." Capital spending is expected to increase further in 2026 due to demand and growth opportunities, Chief Financial Officer Anat Ashkenazi said on the call. Ashkenazi added that while the pace of server deployment has improved, Alphabet continues to face more customer demand for its cloud services than it can supply. Google had earlier pledged about $75 billion in capital spending this year, part of the more than $320 billion that Big Tech is expected to pour into building AI capabilities. CLOUD GAINS The rise of artificial intelligence technologies has propelled demand for cloud computing services. Google Cloud still trails Amazon's AWS and Microsoft's Azure in total sales, but has tried to gain ground by touting AI offerings, including its in-house TPU chips that rival Nvidia's GPUs. The business segment grew its quarter-over-quarter customer count by 28%, Pichai said on the call. "The comprehensiveness of our AI portfolio, the breadth of our offerings, both providing our models on GPUs and TPUs for our customers, all of that has been really driving demand," he said. In a huge win for Alphabet, ChatGPT maker OpenAI recently added Google Cloud to its list of cloud capacity suppliers, as Reuters exclusively reported in June, in a surprising collaboration between two companies that are competing head-to-head in AI. It also marked OpenAI's latest move to diversify beyond its major backer Microsoft. The capex increase nevertheless raises concerns about Alphabet's pace of monetization and its impact on near-term profitability, senior analyst Jesse Cohen said. Alphabet and its peers have defended their aggressive AI spending amid rising competition from Chinese rivals and investor frustration with slower-than-expected payoffs, saying those massive investments are necessary to fuel growth and improve their products. AI RACE Google Search's artificial intelligence features such as AI Overviews and AI Mode are also helping the company boost engagement and tackle rising competition from chatbots such as ChatGPT that have surged in popularity. AI Mode has grown to 100 million monthly active users just two months after Google announced the start of its large-scale rollout during its annual developer conference. Google's own ChatGPT competitor, called Gemini, has more than 450 million monthly users, Pichai said. Google's advertising revenue, which represents about three-quarters of the tech major's overall sales, rose 10.4% to $71.34 billion in the second quarter, beating expectations for $69.47 billion, according to data from LSEG. "Hopefully, this will damper concerns by the investment community that has been worried that products like OpenAI/ChatGPT could be having an impact on Google's Search query growth," said Dan Morgan, senior portfolio manager at Synovus Trust. Alphabet reported total revenue of $96.43 billion for the second quarter ended June 30, compared with analysts' average estimate of about $94 billion, according to data compiled by LSEG. The company reported profit of $2.31 per share for the period, beating estimates of $2.18 per share, according to LSEG data.
Mint
22-07-2025
- Business
- Mint
Alphabet will seek to reassure investors as AI rivals step up competition
By Deborah Mary Sophia and Zaheer Kachwala (Reuters) -Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. ** Alphabet is expected to report a near 11% jump in total revenue for the second quarter, per LSEG data. ** Analysts expect a 7.5% rise in advertising revenue and a 26.2% jump in its cloud computing segment. ** Per-share earnings are expected to be around $2.18, excluding one-off items. ** Alphabet shares are largely flat so far this year. ** Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia leading the range with a 28% jump and Tesla at the bottom with a 19% decline. ** Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84.
Yahoo
15-05-2025
- Business
- Yahoo
Alibaba misses revenue estimates as it fights for China e-commerce market dominance
By Casey Hall and Deborah Mary Sophia (Reuters) -Alibaba posted quarterly revenue that missed analysts' estimates on Thursday, as the e-commerce group works on new strategies to keep consumers spending amid persistent economic weakness in China and uncertainty over the impact of tariffs. U.S.-listed shares of the Chinese company fell nearly 7% in early trading. They have risen about 58% so far this year. Adjusted earnings of 12.52 yuan ($1.74) per American Depositary Share for its fiscal fourth quarter ended March 31 were also slightly below the 12.94 expected by analysts polled by LSEG. Revenue was 236.45 billion yuan, compared with 237.24 billion yuan expected by analysts. Alibaba's rival beat first-quarter revenue estimates on Tuesday and said it was seeing strong user growth despite the prolonged economic weakness weighing on consumer sentiment. Chinese shoppers, grappling with a prolonged property crisis and a cloudy economic outlook, have increasingly become cost-conscious, prompting deep discounts and rock-bottom prices to stimulate spending. That has sparked a price battle among China's largest online e-commerce platforms including Alibaba, PDD Holdings' Pinduoduo and as they jostle for market share. Alibaba's domestic e-commerce business Taobao and Tmall Group produced revenue growth of nearly 9% for the quarter, the group said, attributing this to strong momentum in new consumer growth and a continuing increase in orders. Chinese e-commerce giants have been aggressively expanding into so-called instant retail, focusing on delivery speeds of 30 to 60 minutes, in their battle for market share. Both and Alibaba's platforms have increased incentives to users including coupons to try their expanded instant retail and food delivery offerings. Alibaba E-commerce Business Group Chief Executive Jiang Fan told analysts on a call that Alibaba would be "investing aggressively" in the instant retail business in the short term. "One thing to note about this instant retail market is that it's a huge market," he said. "Today, it could be a market of say 500 to 600 million consumers. Going forward, that can easily become 1 billion consumers." CLOUD INTELLIGENCE Alibaba's international commerce division (AIDC), which includes cross-border player AliExpress, produced 22% in revenue growth, though that missed forecasts for 26.4% growth. "International business missed but I'm not sure if it was due to AliExpress suffering from tariff impacts," said M Science analyst Vinci Zhang. "I thought it was interesting that they didn't highlight anything related to the U.S... That to me felt a bit deliberate."
Time of India
02-05-2025
- Business
- Time of India
Amazon cloud revenue, income forecast disappoint, shares slide
By Deborah Mary Sophia and Greg Bensinger on Thursday reported first-quarter cloud revenue growth and forecast operating income below estimates, disappointing investors. Shares of the company fell as much as 5% in after-hours trading before moderating. Amazon Web Services , the company's cloud unit, recorded a 16.9% increase in quarterly revenue, to $29.27 billion, missing expectations of 17.4% growth and $30.9 billion in sales. Rival Microsoft, by comparison, reported on Wednesday it had exceeded estimates for its Azure cloud unit. AWS revenue grew at its slowest pace in five quarters. "It's always felt like AWS and Google Cloud were taking the most share for quite some time, but maybe that's starting to turn because Microsoft posted great numbers," said Dave Wagner, portfolio manager at Aptus Capital Advisors. He said expectations for Amazon were higher after Microsoft's strong performance. High tariffs imposed by U.S. President Donald Trump on goods imported from China have cast uncertainty on retailers such as Amazon. Some sellers, for instance, have said they plan to sit out the company's heavily-promoted Prime Day sales event in July, Reuters reported. The Seattle company said operating income for the current quarter would be between $13 billion and $17.5 billion, compared with the average estimate of $17.7 billion, according to LSEG data. CEO Andy Jassy sought on a call with analysts to ease jitters about the tariffs, which are expected to boost retail prices in the coming months. "We haven't seen any attenuation of demand yet," Jassy said. "We've seen some heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact." He added: "We also have not seen the average selling price of retail items appreciably go up yet," noting that sales of lower-cost essentials were rising steadily. Growth in revenue from third-party seller services more than halved to 7% in the first quarter, excluding the impact of foreign exchange. Amazon's forecast for second-quarter sales was above estimates, however, a reassuring sign to investors that the e-commerce company would navigate uncertainty related to tariffs. Amazon reported total revenue of $155.7 billion for the first quarter ended March 31, compared with analysts' estimate of $155.04 billion, according to data compiled by LSEG. The company expects net sales between $159 billion and $164 billion for the second quarter, compared with analysts' average estimate of $160.91 billion, according to data compiled by LSEG. Amazon posted a 19% jump in online ad sales to $13.92 billion, surpassing analyst estimates. The company has become a major player in ad sales, trailing only Meta and Alphabet.
Time of India
01-05-2025
- Business
- Time of India
Microsoft forecasts strong growth for Azure cloud business, shares surge 7%
By Deborah Mary Sophia, Stephen Nellis and Aditya Soni Microsoft forecast on Wednesday stronger-than-expected quarterly growth for its cloud-computing business Azure after blowout results in the latest quarter, calming investor worries in an uncertain economy and lifting its shares 7% after hours. Microsoft's results, which follow similar outcomes from Google last week, could ease concerns about a potential slowdown in AI demand, after some analysts pointed to canceled data-center leases at Microsoft as a sign of excess capacity. Investors had also been worried about the fallout from sweeping U.S. tariffs that are prompting businesses to rein in spending, but robust advertising sales at Meta Platforms suggested that is so far not happening. The rise in Microsoft's shares set it on course to add more than $200 billion to its value. Microsoft said revenue at its Azure cloud division rose 33% in the third quarter ended March 31, exceeding estimates of 29.7%, according to Visible Alpha. AI contributed 16 percentage points to the growth, up from 13 points in the previous quarter. The company also forecast cloud-computing revenue growth of 34% to 35% on a constant currency basis for the fiscal fourth quarter to between $28.75 billion and $29.05 billion, well above analyst estimates, according to data from Visible Alpha. Commercial bookings growth - which reflects new infrastructure and software contracts signed by business customers - rose 18% in the fiscal third quarter, driven in part by a new Azure contract with ChatGPT creator OpenAI. Microsoft declined to comment on the size of the deal or what role it played in overall Azure sales growth. However, Amy Hood, Microsoft's chief financial officer, told investors on a conference call that the AI contribution to the cloud computing business was in line with the company's expectations, while "the real outperformance in Azure this quarter was in our non-AI business." "So the only real upside we saw on the AI side of the business was that we were able to deliver supply early to a number of customers," Hood said. The company's Azure results came after a number of Wall Street analysts had lowered expectations as research reports said Microsoft had ended some data center lease obligations. CEO Satya Nadella said on a conference call that Microsoft has a long history of constantly adjusting its data center plans, but only in recent quarters had analysts started closely scrutinizing those moves. "The numbers were skeptical going in, giving them the room to beat pretty heavy. The beat wouldn't have been this big if we didn't have all these problems," said Dan Morgan, senior portfolio manager at Synovus Trust, referring to tariff uncertainty. SPENDING RISES FOR SHORTER-LIVED ASSETS Redmond, Washington-based Microsoft reported a profit of $3.46 per share in the quarter, topping expectations of $3.22 per share. Revenue rose 13% to $70.1 billion, with the Intelligent Cloud unit, which houses Azure, contributing $26.8 billion. In the third quarter, Microsoft's capital expenditures jumped 53% to $21.4 billion, however the proportion of longer-lived asset expenditures fell to about half of the total. Hood told investors that in the company's fiscal 2026, which will begin in July, capital expenditures will continue to grow, but at lower growth rates than for the current year and with more of an emphasis on shorter-lived assets. That reflected a shift in Microsoft's spending on assets such as data center buildings toward assets such as chips, said Jonathan Neilson, Microsoft's vice president of investor relations. "You plug in CPUs and GPUs, and then you can start recognizing revenue," Neilson said, referring to categories of chips made by Intel, Advanced Micro Devices and Nvidia, among others. Microsoft, which has repeatedly said it is capacity constrained on AI, has been pouring billions into building its AI infrastructure and expanding its data-center footprint. A pullback in Big Tech's AI spending would have big implications for suppliers such as chip giant Nvidia, as well as the U.S. economy. J.P. Morgan analysts estimated in January that data-center spending could contribute between 10 and 20 basis points to U.S. economic growth in 2025-2026.
