Google and Microsoft held earnings calls Tuesday in which the two big tech rivals outlined some of their plans for further incorporating artificial intelligence (AI) technologies into their products and services.
Alphabet, the parent company of Google, announced its financial results for the second quarter of 2023, which included a heavy focus on the company’s AI initiatives.
“Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of search and improving all our services,” CEO Sundar Pichai said in his opening remarks.
Google has faced some criticism for seemingly losing a competitive edge in the generative AI arms race to its big tech rivals, including Microsoft, which incorporated OpenAI’s ChatGPT into its web search engine and browser.
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Pichai said search is Google’s “most important product.
“This quarter saw our next major evolution with the launch of the Search Generative Experience, or SGE, which uses the power of generative AI to make search even more natural and intuitive,” Pichai said. “User feedback has been very positive so far. It can better answer the queries people come to us with today while also unlocking entirely new types of questions that search can answer.”
Google launched its experiment with SGE in May. The generative AI search tool is an opt-in feature that’s only available in English and for U.S.-based users. Google’s approach with rolling out SGE in an experimental format is similar to how it released Bard, a conversational AI chatbot that Pichai touted as an example of people using Google’s AI tools to “boost their creativity and productivity.”
“One example is Bard, our experimental conversational AI. Since launching in March, it continues to get better. We rolled out a number of exciting features and capabilities earlier this month. Bard is now available in most of the world and in over 40 of the most widely spoken languages,” Pichai said. “We also added Google Lens capabilities so you can take an image and ask all kinds of questions, turn it into code and more.”
Additionally, Pichai said Android 14 “will include generative AI tools.” The next generation of the smartphone operating system is expected to be released in August 2023.
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Google’s advertising offerings within its search functionality are also getting an AI upgrade that will help clients generate advertising assets that are optimized to what customers are searching for.
“We’ve long said it’s all about reaching the right customer with the right creative at the right time. So, later this year, automatically created assets which are already generating headlines and descriptions for search ads will start using generative AI to create assets that are even more relevant to customer queries,” said Google Chief Business Officer Philipp Schindler.
During his remarks, Pichai also noted that Google signed on to a set of voluntary guidelines for the responsible development of AI technologies in conjunction with other leading tech firms, such as Amazon, Anthropic, Inflection, Meta, Microsoft and OpenAI.
Google’s stock has risen over 37% year to date in part due to its AI initiatives. Shares of its Class A stock began the year at just over $89 per share and were trading above $122 per share as of Tuesday’s close.
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Microsoft CEO Satya Nadella said in his opening remarks the Seattle-headquartered tech company has “great momentum across Azure OpenAI service.”
“More than 11,000 organizations across industries, including IKEA, Volvo Group, Zurich Insurance,” in addition to a number of digital organizations that combined to help Microsoft serve “nearly 100 new customers added every day this quarter,” he said.
Nadella said those new customers are moving quickly to incorporate generative AI tools like ChatGPT via its integration into the Azure cloud service into systems their customers or employees use every day.
“Mercedes Benz, for example, is bringing ChatGPT via Azure OpenAI to more than 900,000 vehicles in the United States, making its in-car voice assistant more intuitive, and Moody’s built its own internal co-pilot to improve the productivity of its 14,000 employees,” he said.
Nadella said Microsoft’s AzureAI platform is becoming the “tool of choice” for AI developers, while the company’s AI-informed coding, data analysis and security tools are attracting broad interest, which has also extended to tools for building virtual agents.
“One of our tools that’s really taken off is Power Virtual Agents, which is delivering one of the biggest benefits of this new era of AI, helping customer service agents be significantly more productive,” he explained. “HP and Virgin Money, for example, have both built custom chatbots with Copilot and Power virtual agents that were trained to answer complex customer inquiries. All up, more than 63,000 organizations have used AI-powered capabilities and Power platform, up 75% quarter over quarter.”
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Microsoft’s success in incorporating AI into a broad swath of tools has seen the company’s stock soar by more than 46% from just under $240 per share at the start of 2023 to $350 a share as of Tuesday’s close.
Wall Street analysts think there may be even more room for it to rise. Tyler Radke, co-head of U.S. software equity research at Citi, said on FOX Business’s “Making Money With Charles Payne” that Citi has raised its price target for Microsoft to $425 per share.