Alphabet, Microsoft lead technology stocks surge with AI-driven earnings

In a remarkable rally on Friday, technology behemoths Alphabet and Microsoft spearheaded a surge in the stock market, showcasing robust earnings powered by substantial investments in Artificial Intelligence (AI). 

The impressive performance laid to rest concerns that their hefty investments might take longer to yield returns, especially following Meta Platforms' lukewarm forecast.

Alphabet soared by an impressive 10%, marking a historic milestone as its stock market valuation surpassed $2 trillion for the first time, as per data from the London Stock Exchange Group (LSEG). 

The surge was accompanied by a generous offering to investors, including the announcement of its inaugural dividend and a massive $70 billion stock buyback program.

Meanwhile, Microsoft witnessed a nearly 2% increase, adding a staggering $54 billion to its market capitalisation.

Both tech giants, after pouring billions into AI infrastructure, reported quarterly revenue growth that exceeded expectations. 

This was attributed to the increasing adoption of services such as the Copilot AI assistant and the Gemini chatbot.

Amy Hood, Microsoft's finance chief, revealed that AI services contributed significantly to the 31% revenue surge at the company's Azure cloud-computing platform between January and March, accounting for 7 percentage points of the growth. 

However, she noted that the immediate demand for AI surpassed the company's capacity, impeding growth for the quarter and underscoring the need for further infrastructure expansion.

Similarly, Google witnessed a robust 28% increase in cloud revenue, propelled by strong growth in Google Workspace, which offers an array of AI features leveraging its expansive language model, Gemini.