This earnings season is all about AI

If there’s one lesson we can take away from first-quarter earnings so far, it’s that Big Tech’s CEOs are all in on AI. Need proof? Just listen to what they have to say during their companies’ earnings calls.

Let’s start with Google parent company Alphabet’s (GOOG, GOOGL) CEO Sundar Pichai. The search giant, which long led the AI conversation in Big Tech, is facing a major threat from Microsoft (MSFT) and OpenAI. To counter that narrative, Pichai spent a large chunk of Alphabet’s earnings call laying out the company’s AI roadmap and offerings.

The CEO mentioned AI 34 times in his opening remarks alone. It was the first topic he covered, ahead of Alphabet’s cost-cutting efforts and even Google Cloud, which the company is trying to grow to catch up to cloud offerings from rivals Microsoft and Amazon.

“Our investments and breakthroughs in AI over the last decade have positioned us well,” Pichai said during the call. He then went on to explain how AI is already being used or being built into everything from Google’s advertising offerings to its productivity suite.

And, of course, the CEO was sure to mention how Google is working to bring generative AI to its all-important search business.

“We’ll be guided by data and years of experience about what people want and our high standards for quality,” he said. “And we will test and iterate as we go, because we know that billions of people trust Google to provide the right information.

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Alphabet finds itself in an unfamiliar position. The company has long dominated AI research thanks to its world-class teams. Heck, Google is responsible for some of the research behind the transformer technology that powers OpenAI’s ChatGPT.

But Microsoft’s partnership with OpenAI has left the tech giant searching for a means to respond to the Windows maker’s challenge. And part of that is extolling the virtues of Alphabet’s own AI capabilities and know-how.

Nadella takes a lap

Not to be outdone by Pichai, Microsoft CEO Satya Nadella also made AI a key part of his earnings call discussion. Nadella uttered the term AI 31 times during his opening remarks, mentioning it across Microsoft’s various business segments whether that was the cloud, productivity, search, and more.

“We are focused on continuing to raise the bar on our operational excellence and performance, as we innovate to help our customers maximize the value of their existing technology investments and thrive in the new era of AI,” Nadella said.

Microsoft CEO Satya Nadella made AI a key part of the company's earnings call discussion. (AP Photo/Richard Drew, File)
Microsoft CEO Satya Nadella made AI a key part of the company's earnings call discussion. (AP Photo/Richard Drew, File) (ASSOCIATED PRESS)

Microsoft’s partnership with OpenAI has put it in the lead position in the AI wars — at least from a public relations and investor perspective. From its Edge browser and Bing chatbot to Microsoft 365 and Dynamics 365, the company is rolling out its generative AI capabilities across the board.

And nowhere was Nadella more emphatic about the company’s AI future than when he mentioned how it will impact Microsoft’s quest to take on Google Search with its own Bing search engine.

“We look forward to continuing this journey in what is a generational shift in the largest software category – search,” Nadella said.

Meta putting AI first

The conversation was a bit different over at Meta (META) during that company’s earnings call. CEO Mark Zuckerberg led with a discussion about the social media giant’s recent layoffs before jumping right to AI.

He mentioned AI 22 times during his rundown on the call, saying it’s improving monetization for the company’s ads, driving recommendation engines for its services, and could lead to AI chat bots for Messenger and WhatsApp. Zuckerberg also dove into how the company is investing in the infrastructure needed to power its AI ambitions.

Mark Zuckerberg mentioned AI 22 times in his rundown on Meta's earnings call. (Photo by Samantha Burkardt/Getty Images for SXSW)
Mark Zuckerberg mentioned AI 22 times in his rundown on Meta's earnings call. (Photo by Samantha Burkardt/Getty Images for SXSW) (Samantha Burkardt via Getty Images)

Naturally, the CEO tied his company’s AI efforts with his long-term plans for the metaverse. Zuckerberg insisted that he’s not ditching the metaverse in favor of AI, and instead said that the two technologies will benefit each other.

Meta, like Alphabet and Microsoft, has a powerful AI division and has been working in the space for years. But the excitement generated by OpenAI and ChatGPT has forced the company to respond by putting AI front and center in its investor statements.

There’s still a cavalcade of companies preparing to report their quarterly results, including the likes of Apple and Nvidia. But so far, it seems that if you’re in the tech industry, you’ll need to at least mention AI or get left behind.

By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley

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