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Is Google or Microsoft the Better AI Stock to Purchase Right Now?

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Is Google or Microsoft the Better AI Stock to Purchase Right Now

With the release of ChatGPT’s current version in late 2022, OpenAI sparked increased investor interest in all things artificial intelligence (AI). Since then, two companies that have emerged as leaders in artificial intelligence (AI)—Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG)—have defined the field and its uses. Microsoft and OpenAI are strong partners, and shortly after the release of ChatGPT, Alphabet unveiled Bard, their response to the chatbot.

Both Alphabet and Microsoft released Bard, their AI-powered Bing Chat, and they both released their October–December quarter earnings reports almost a year ago. On hearing the news, investors dumped both stocks, raising the possibility that the AI stock frenzy was overblown. Nevertheless, both businesses had strong results.

Examining each company’s most recent report, let’s determine which is the best AI stock to purchase right now.

Microsoft Reports Gains Across the Board

Microsoft’s profits demonstrate why the corporation recently overtook Apple as the most valuable company in the world. In fairness, the enterprise software company’s earnings from the previous quarter have slightly improved as a result of the closing of its acquisition of Activision Blizzard in October.

Microsoft’s fiscal 2024 second-quarter sales of $62 billion exceeded analyst projections of $61.14 billion, an 18% year-over-year increase. Operating income increased by 33% on an annual basis, or by 25% when measured against non-GAAP (generally accepted accounting principles). In terms of financial performance, profits per share (EPS) increased to $2.93, or 33% on an annual basis or 26% on a non-GAAP basis. That, too, exceeded projections.

Microsoft’s cloud business was once again a strength of the corporation; Azure revenue increased by 30% and its intelligent cloud segment rose by 20% annually. Bing Chat’s revenue growth from search and news advertising was just 8% year over year, which suggests that the company’s expectations were not met.

After hours, Microsoft ended the day with a 0.3% decrease.

Alphabet Performs Poorly on a Crucial Metric

Overall, Alphabet’s fourth-quarter fiscal 2023 report was strong as the business continues to bounce back from the downturn in the digital ad sector. After-hours trading saw a 6% decline in the stock price due to the revenue’s 13% year-over-year increase to $86.3 billion, which was higher than the consensus estimate of $85.3 billion. However, the ad revenue of $65.5 billion fell short of expectations.

The less-than-expected increase in ad revenue appeared to suggest that either Alphabet was losing market share to rivals or that AI hasn’t yet had a big enough influence on ad spending.

EPS increased from $1.05 to $1.64 on the bottom line as a result of a $2 billion improvement in equity securities. To $23.7 billion, operating income increased by 30%.

The ongoing instability in Google Network, whose revenue dropped once more, contributed to an 11% increase in ad revenue to $65.5 billion. Its second highly watched business area, Google Cloud, had a 26% growth to $9.2 billion and an operating income of $864 million, compared to a $186 million loss in the same quarter last year.

The Side-By-Side Analysis

Last year, the stock prices of Microsoft and Alphabet both experienced significant growth, and in the most recent quarter, both companies reported comparable increases in their top and bottom lines. When it comes to AI tactics, Microsoft seems to have the upper hand between the two firms.

The Office 365 suite, Azure, Bing, Github, and Azure are just a few of the products that the corporation has integrated its AI-powered Copilot into. Additionally, according to Microsoft management, AI was responsible for six percentage points of Azure revenue growth, or a rise from 24% to 30%. This is a noteworthy development that is probably going to get better.

Ultimately, Microsoft appears to have been better equipped for the AI revolution than Alphabet, as evidenced by its acquisition of Github, which integrated effectively with its AI Copilot tools, and its revolutionary investment in OpenAI.

Conversely, Alphabet only integrated Google Brain this year, despite having bought DeepMind, an AI research center, some years earlier. With regard to AI conversation, the parent company of Google has the technology to launch its own chatbot, but it chose to allow OpenAI and ChatGPT take the lead.

Why Microsoft is a superior option for buying AI stock

While Alphabet is not averse to artificial intelligence, the parent company of Google does not have the applications or strategy necessary to properly capitalize on generative AI, unlike Microsoft.

Conversely, Microsoft has made preparations for this eventuality and has taken calculated chances, such as forming an alliance with OpenAI. In addition, its product portfolio is substantially more varied than Alphabet’s, which derives the majority of its revenue from advertisements and hasn’t appeared to gain much from AI thus far.

Although Microsoft stock costs more than Alphabet stock does, it is the superior AI stock in this case. With the new technology, its long-term prospects remain far more hopeful.

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Threads uses a more sophisticated search to compete with Bluesky

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Instagram Threads, a rival to Meta’s X, will have an enhanced search experience, the firm said Monday. The app, which is based on Instagram’s social graph and provides a Meta-run substitute for Elon Musk’s X, is introducing a new feature that lets users search for certain posts by date ranges and user profiles.

Compared to X’s advanced search, which now allows users to refine queries by language, keywords, exact phrases, excluded terms, hashtags, and more, this is less thorough. However, it does make it simpler for users of Threads to find particular messages. Additionally, it will make Threads’ search more comparable to Bluesky’s, which also lets users use sophisticated queries to restrict searches by user profiles, date ranges, and other criteria. However, not all of the filtering options are yet visible in the Bluesky app’s user interface.

In order to counter the danger posed by social networking startup Bluesky, which has quickly gained traction as another X competitor, Meta has started launching new features in quick succession in recent days. Bluesky had more than 9 million users in September, but in the weeks after the U.S. elections, users left X due to Elon Musk’s political views and other policy changes, including plans to alter the way blocks operate and let AI companies train on X user data. According to Bluesky, there are currently around 24 million users.

Meta’s Threads introduced new features to counter Bluesky’s potential, such as an improved algorithm, a design modification that makes switching between feeds easier, and the option for users to select their own default feed. Additionally, it was observed creating Starter Packs, its own version of Bluesky’s user-curated recommendation lists.

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Apple’s own 5G modem-equipped iPhone SE 4 is “confirmed” to launch in March

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Tom O’Malley, an analyst at Barclays, recently visited Asia with his colleagues to speak with suppliers and makers of electronics. The analysts said they had “confirmed” that a fourth-generation iPhone SE with an Apple-designed 5G modem is scheduled to launch near the end of the first quarter next year in a research note they released this week that outlines the main conclusions from the trip. That timeline implies that the next iPhone SE will be unveiled in March, similar to when the present model was unveiled in 2022, in keeping with earlier rumors.

The rumored features of the fourth-generation iPhone SE include a 6.1-inch OLED display, Face ID, a newer A-series chip, a USB-C port, a single 48-megapixel rear camera, 8GB of RAM to enable Apple Intelligence support, and the previously mentioned Apple-designed 5G modem. The SE is anticipated to have a similar design to the base iPhone 14.

Since 2018, Apple is said to have been developing its own 5G modem for iPhones, a move that will let it lessen and eventually do away with its reliance on Qualcomm. With Qualcomm’s 5G modem supply arrangement for iPhone launches extended through 2026 earlier this year, Apple still has plenty of time to finish switching to its own modem. In addition to the fourth-generation iPhone SE, Apple analyst Ming-Chi Kuo earlier stated that the so-called “iPhone 17 Air” would come with a 5G modem that was created by Apple.

Whether Apple’s initial 5G modem would offer any advantages to consumers over Qualcomm’s modems, such quicker speeds, is uncertain.

Qualcomm was sued by Apple in 2017 for anticompetitive behavior and $1 billion in unpaid royalties. In 2019, Apple purchased the majority of Intel’s smartphone modem business after the two firms reached a settlement in the dispute. Apple was able to support its development by acquiring a portfolio of patents relating to cellular technology. It appears that we will eventually be able to enjoy the results of our effort in four more months.

On March 8, 2022, Apple made the announcement of the third-generation iPhone SE online. With antiquated features like a Touch ID button, a Lightning port, and large bezels surrounding the screen, the handset resembles the iPhone 8. The iPhone SE presently retails for $429 in the United States, but the new model may see a price increase of at least a little.

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Google is said to be discontinuing the Pixel Tablet 2 and may be leaving the market once more

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Google terminated the development of the Pixel Tablet 3 yesterday, according to Android Headlines, even before a second-generation model was announced. The second-generation Pixel Tablet has actually been canceled, according to the report. This means that the gadget that was released last year will likely be a one-off, and Google is abandoning the tablet market for the second time in just over five years.

If accurate, the report indicates that Google has determined that it is not worth investing more money in a follow-up because of the dismal sales of the Pixel Tablet. Rumors of a keyboard accessory and more functionality for the now-defunct project surfaced as recently as last week.

It’s important to keep in mind that Google’s Nest subsidiary may abandon its plans for large-screen products in favor of developing technologies like the Nest Hub and Hub Max rather than standalone tablets.

Google has always had difficulty making a significant impact in the tablet market and creating a competitor that can match Apple’s iPad in terms of sales and general performance, not helped in the least by its inconsistent approach. Even though the hardware was good, it never really fought back after getting off to a promising start with the Nexus 7 eons ago. Another problem that has hampered Google’s efforts is that Android significantly trails iPadOS in terms of the quantity of third-party apps that are tablet-optimized.

After the Pixel Slate received tremendously unfavorable reviews, the firm first declared that it was finished producing tablets in 2019. Two tablets that were still in development at the time were discarded.

By 2022, however, Google had altered its mind and declared that a tablet was being developed by its Pixel hardware team. The $499 Pixel Tablet was the final version of the gadget, which came with a speaker dock that the tablet could magnetically connect to. (Google would subsequently charge $399 for the tablet alone.)

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