Global tech giants’ thrust on AI starts yielding dividends
image for illustrative purpose
![Global tech giants’ thrust on AI starts yielding dividends Global tech giants’ thrust on AI starts yielding dividends](https://www.bizzbuzz.news/h-upload/2024/05/02/1898215-ai.webp)
Global technology giants have posted sound performance in the first quarter of 2024. Firms like Microsoft, Google, and IBM among others have shown improvement in their performances during their period. The 2023 lull in technology spend has made way for a steady rise on cloud, artificial intelligence and other digital transformative projects. Moreover, the huge investments on AI space have started yielding results. For instance, the management of Google has clearly indicated that their monetisation plans from AI-powered solutions are accelerating. “Our cloud business continues to grow, as we bring the best of Google AI to enterprise customers and organisations around the world. And Google One now has crossed 100 million paid subscribers, and in Q1, we introduced a new AI Premium plan with Gemini Advanced,” Sunder Pichai, CEO of Google and Alphabet said during the first quarter earnings. Similarly, IBM posted revenue of $14.46 billion during the January-March quarter, a rise of three per cent over the same period last year. Its software segment revenue stood at $5.9 billion, up 5.9 per cent in constant currency term.
The growth of the software segment is majorly driven by higher demand for cloud computing offerings. The company has announced plans to acquire HashiCorp for $6.4 billion in its bid to expand its cloud-based software products offering to clients. As demand for AI-powered solutions rises globally, IBM is trying to strengthen its AI play in the coming quarters. Microsoft also saw its bets on AI paying handsome returns during the first quarter of FY24. AI services accounted for seven percentage points of the 31 per cent jump in revenue at Microsoft's Azure cloud-computing platform during this period. No wonder, shares of Google and Microsoft surged post Q1 earnings as investors cheered the rising spend on AI. Against this backdrop, the rising investment of Indian IT firms on AI and generative AI definitely hold potential and investors can expect to reap dividends in the coming quarters.
Usually, the first benefit to technology spend in new areas is accrued to the likes of Google, Microsoft, IBM and others before trickling down to Indian IT firms. As these global product firms are big clients of Indian IT companies, many of the work in the field of AI and other emerging technologies are being done by IT services companies. Secondly, rising spend of AI by global enterprises puts Indian firms on a good stead. This is more so because enterprises will outsource most of such work to Indian and other IT services companies. Therefore, an earnings uptick owing to AI seems to be on the horizon. That is the reason most IT firms are upskilling their employees on a mission mode. As FY25 is likely to be better than FY24 for the Indian IT industry, it can be safely assumed that most of the growth will come from AI and related fields. Like it was cloud computing a few years back, AI is the new buzzword in the technology world and Indian IT firms cannot afford to ignore it at any cost.