Artificial Intelligence (AI) has undoubtedly been the word of the year in the tech space. While it's true that disruptions in the technology space are nothing new, when top executives of tech giants such as Alphabet, Microsoft and Meta utter the word AI more than 200 times in their investor call, we know things are about to change (if not changed already). These executives mentioned how quickly they are ramping up investment in AI, as the tool is expected to be a source of massive growth.

What they said

The tech industry has been going through a tough time with several big companies resorting to layoffs. However, despite announcing these cost-cuts, big tech firms continued to invest in artificial intelligence, with generative AI taking a center stage.

During their earnings conference call, CEO Sundar Pichai gave an update on Alphabet’s AI business and how the company plans to focus on AI and metaverse, saying, “Our investments and breakthroughs in AI over the last decade have positioned us well.” Ruth Porat, CFO Alphabet, mentioned that the tech giant is slowing the pace of operating expense growth while creating capacity for key investment areas, particularly AI.

Meta’s Mark Zuckerberg mentioned that they will continue to scale their investment in AI. “Our AI work comes in two main areas: first, the massive recommendations and ranking infrastructure that powers all our main products -- from feeds to Reels to our ads system to our integrity systems and that we’ve been working on for many many years. And, second, the new generative foundation models that are enabling entirely new classes of products and experiences.”

Microsoft, a company that has been a forerunner when it comes to application of AI, also had similar claims during their earnings call. CEO Satya Nadella said, “We have the most powerful AI infrastructure, and it’s being used by our partner OpenAI, as well as NVIDIA, and leading AI startups like Adept and Inflection to train large models.”

For the current quarter, Microsoft expects Azure revenue growth to be 26% to 27% in constant currency, including roughly 1 point from AI services.

We spoke to people working in the field of AI to tell us how AI might impact big tech companies, and in turn lead to monetization growth for the company as well as advertisers.

The new money-maker for tech giants

According to Kevin Baragona, founder of DeepAI, big tech companies can expect significant growth from its investments in AI. "While I can only speculate, right now, big tech companies are likely still investing much more in AI than they are getting out of it. It is the start of the big AI war, and it remains to be seen whose products will ultimately win. The goal is to win that battle, and all are heavily investing to do so.”

“AI played a significant role in the Q1 2023 growth of big tech firms due to the launch of new AI-powered products. In the coming months and years, big tech companies expect substantial gains from these investments, particularly in areas such as search, advertising, chatbot assistants, and image manipulation,” he added.

Sauvik Banerjee, Global CEO, Products, Technology and Digital Services, Rezolve said earnings of big tech firms have taken velocity on projection due to the arrival of Generative AI. “Meta has had inherent AI as part of their stack for a very long time where N=1 personalization has been their core powering the individual feed framework. Google has invested in Deep Mind. Microsoft’s bet on Open AI will power the entire Azure efficiency and all Azure customers powering O365 To the native Azure stack.”

“Since all the above have direct subscription and consumption economic models, the earnings of all the three will grow significantly quarter by quarter than year on year,” mentioned Banerjee.

Speaking on similar lines, Shradha Agarwal, Co-Founder & CEO, Grapes explains how AI is aiding the growth of these firms, and in turn helping brands and advertisers grow along as well.

“Being the biggest names in the tech space, leveraging artificial intelligence is the natural next step for firms like Alphabet, Meta and Microsoft. Recently, AI has been aiding in their growth in two distinct ways - allowing them to expand & evolve their services for their consumer base and helping them build AI-enabled operations for their organisations,” Agarwal said.

“Virtual assistants like Google Assistant, Amazon Alexa and Microsoft Cortana are also seeing key evolutions with their parent companies further experimenting with AI and its applications. Overall, these big tech players are best positioned to create and deliver the AI experience to the masses with their vast roster of consumer-centric digital products and services,” she added.

Rajeev Dhal, Chief Operating Officer, AdOnMo, says big tech companies have harnessed the power of AI to enhance their products and services, leading to increased user engagement and revenue generation.

Talking about the effect this can have on the digital OOH industry, he said, “AI enables personalized recommendations, targeted advertising, and improved search algorithms, delivering a better user experience. AI is likely to continue driving growth for these firms during the year as they are investing heavily in AI research and development. The impact of AI will be experienced by all media channels including the digital OOH industry. For DOOH, it will enable real-time audience analytics, dynamic content optimization, automated ad placement, and contextual targeting, enhancing campaign effectiveness, personalization, and maximizing ROI for advertisers and brands.”

Siddharth Dabhade, Managing Director of MiQ India, China and SAARC, says AI-powered personalization has been a game-changer for big tech firms. “We have seen high consumer engagement and loyalty by using AI algorithms to analyze user behaviour, preferences, and interactions. Brands can personalize their offerings and provide a better user experience. By developing cutting-edge products and services, AI is also assisting major tech companies in generating new sources of income. For instance, Google uses AI to develop new ad products while Microsoft uses it to develop new services in industries like healthcare, finance, and education.”

“Overall, AI is becoming an increasingly important factor in the growth of big tech firms. Companies that invest in AI and develop AI-powered solutions are likely to see continued growth and success in the years ahead,” Dabhade adds.

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