Microsoft, Alphabet and AMD Struggle to Meet AI Expectations

Microsoft Corp., Alphabet Inc.’s Google and Advanced Micro Devices Inc. — three companies working harder than nearly anyone to weave artificial intelligence into their products — are finding that investor expectations for the technology are hard to meet.

Shares of the tech giants slipped in premarket trading on Wednesday, the morning after they delivered results for the last three months of 2023 and forecasts for the current quarter. Microsoft dropped as much as 2.3% in early trading. Google fell as much as 5.9% and AMD dropped up to 7.3% before markets opened in New York.

All three took pains to highlight progress on AI. In AMD’s case, the company predicted that its new AI processors will generate even more sales than expected. Microsoft touted how users were embracing its AI assistants, and Google said the technology was improving its search and cloud computing services.

But investors had bid up shares of the companies to record highs in recent weeks, betting that an AI bonanza would quickly fuel results. What they heard on Tuesday wasn’t enough to satisfy those hopes.

“Companies are continually having to prove themselves and continually prove the value proposition of AI,” Katrina Dudley, a portfolio manager and analyst at Franklin Templeton, said on Bloomberg Television.

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