Despite layoffs tech giants report positive results as sector rebounds

Amidst widespread layoffs, the tech sector could finally be showing signs of recovery as giants Microsoft, Google's parent company, Alphabet, and Amazon reported positive revenue results boosting their stock prices.

Microsoft Corp has reported better-than-expected quarterly revenue and profit, buoyed by growth in its cloud computing and Office productivity software businesses. According to a report released on Tuesday, the company also said its artificial intelligence products were driving sales. Shares surged by 8.3 per cent in after-market trading after Microsoft announced earnings of $2.45 per share in the fiscal third quarter, beating Wall Street estimates of $2.23 per share, according to data from Refinitiv.

Despite concerns about the economic outlook, Microsoft's cloud computing services and software sales continue to attract customers. The company's Azure cloud business saw growth of 27 per cent in the latest quarter, beating analyst expectations for 26.6 per cent growth, according to data from Visible Alpha. Microsoft's productivity segment, which includes Office software and advertising sales for LinkedIn, also exceeded analyst expectations with revenue of $17.5 billion, versus estimates of $16.99 billion.

CEO Satya Nadella told investors during a conference call that the company had more than 2,500 Azure-OpenAI service customers and that AI was integrated into a wide range of products. Bing, the search engine that was once considered an also-ran to Google, has 100 million daily users and has seen downloads soar since the addition of AI features, according to Nadella.

Alphabet Inc, which also has a large cloud business, reported strong results on Tuesday, lifting its shares by 2.4 per cent after the bell. Those results, along with Microsoft's, helped to boost shares of Amazon.com Inc, another major cloud operator, by 4.8 per cent in after-hours trading.

Microsoft's revenue rose by 7 per cent to $52.9 billion in the quarter ended March, slightly surpassing analyst estimates of $51.02 billion, according to Refinitiv. The bulk of Microsoft's sales still come from selling software and cloud computing services to customers. However, the company has made headlines this year with its partnership with OpenAI and the integration of artificial intelligence technology into its Bing search engine.

Despite an industry-wide digital ad slowdown, Alphabet's Google and YouTube parent company reported revenues that beat expectations in its advertising segments. YouTube's ad revenue came in at $6.69 billion, a small but significant beat after several tough quarters. Google Cloud also turned a profit for the first time, while revenue in this segment grew by 28 per cent, the fastest of any of the company's main business segments.

Alphabet's revenue for the first quarter was $69.7 billion, surpassing the $68.96 billion that analysts had predicted, according to Bloomberg. The company's earnings per share (EPS) were $1.17, versus an expected $1.08. Google Ad Revenue was $54.55 billion, versus an expected $53.75 billion, and YouTube Ad Revenue was $6.69 billion, versus an expected $6.64 billion.

"We are pleased with our business performance in the first quarter, with Search performing well and momentum in Cloud," said Alphabet and Google CEO Sundar Pichai in a statement. "Our North Star is providing the most helpful answers for our users, and we see huge opportunities ahead, continuing our long track record of innovation."

Both Microsoft and Alphabet have been heavily investing in artificial intelligence technology. Microsoft's partnership with OpenAI has been making headlines, while Alphabet has been working on merging its two AI teams, Google Research's Brain unit and DeepMind. However, losses related to Alphabet's AI efforts totaled $3.3 billion during the first quarter, while its Other Bets segment lost $1.23 billion. Alphabet's operating income during the quarter was $17.4 billion.