Microsoft, Google want to push hard into AI. Ballooning costs, shareholders may hold them back
Microsoft and Google are eager to advance their efforts in generative artificial intelligence (AI), but they face potential resistance from shareholders due to the escalating costs associated with this pursuit. Despite strong quarterly results, both companies warned of substantial investments in data centres and servers throughout the year to develop cutting-edge AI products, dampening investor optimism about financial gains from generative AI. Microsoft’s partnership with OpenAI, involving a commitment of up to $13 billion, propelled it into the forefront of the generative AI race, boosting its share price by over 60 per cent in the past year and surpassing Apple as the world’s largest company. However, investors remain cautious as Microsoft and Google project higher capital expenditures in 2024 for technological infrastructure supporting generative AI. In the final quarter of 2023, Microsoft reported a 20 per cent rise in cloud revenues to $25.9 billion, exceeding analysts’ expec