Microsoft’s significant investment in OpenAI is impacting its earnings – 30th October 2024
The company reportedly indicated, following the quarterly earnings report, that Microsoft anticipates a $1.5 billion reduction in income for the current period, primarily due to projected losses from OpenAI.
Microsoft’s nearly $14 billion investment in OpenAI, the creator of the widely popular ChatGPT assistant, has catalysed the emergence of the generative artificial intelligence industry, leading to billions in new revenue for Microsoft.
Despite this, OpenAI is experiencing substantial financial losses. It is projected to incur $5 billion in losses this year, excluding stock-based compensation, against $4 billion in revenue, according to reports from earlier this month.
Microsoft’s stock declined following weaker-than-expected revenue guidance, despite exceeding earnings expectations.
The company’s revenue reportedly increased by 16% in the fiscal first quarter, outpacing analyst predictions.
Earnings from Azure and other cloud services reportedly rose by 33%, exceeding forecasts.
Nevertheless, the projected revenue growth did not meet analyst expectations.
Meta
Meta’s third-quarter earnings report, released on Wednesday 30th October 2024, disclosed user numbers that fell short of expectations.
The company reported $3.29 billion daily active users for the quarter, marking a 5% increase from the previous year but still below the anticipated $3.31 billion by analysts.
Meta also projected a substantial increase in capital expenditures for 2025.
Additionally, Meta indicated a significant rise in AI spending for 2025.