Microsoft is anticipated to report its slowest revenue growth in a year as investors focus on AI-related earnings and the impact of heavy investments in the technology. While Microsoft has led the way in generative AI, helped by its significant stake in ChatGPT creator OpenAI, adoption of its enterprise AI assistant, Copilot, has lagged. Recent reports suggest a hesitant market for Copilot’s $30-per-month subscription, with many companies still in pilot phases.
Analysts from Morgan Stanley and Visible Alpha expect Microsoft’s capital expenditures in the September quarter to have surged nearly 72% year-on-year, driven by high AI and cloud computing costs. Azure, Microsoft’s cloud unit, likely grew by 33% for the quarter, although that marks a slight dip from prior growth. Despite this, Microsoft hopes for stronger AI-driven revenue in Azure and is targeting faster growth in the second half of the fiscal year.
In the wake of a financial reorganisation in August, Microsoft’s earnings have become harder to predict. With high AI-related costs weighing on margins, Microsoft’s shares have seen minimal growth since July, underperforming the S&P 500. Meanwhile, analysts anticipate a revenue rise of around 14% to $64.5 billion, a modest improvement amid investor concerns over Microsoft’s AI strategies.
Scepticism around Microsoft’s 365 Copilot assistant remains, though some analysts believe recent AI upgrades could drive demand. Microsoft’s productivity unit, including LinkedIn and Office, is expected to maintain steady growth, and the company remains optimistic about AI’s potential to strengthen its productivity suite.
Amazon has announced the international expansion of Rufus, its AI-powered shopping assistant, which will now be available in multiple new markets across Europe and the Americas. Originally launched in the US earlier this year, Rufus assists users with product searches, personalised recommendations, and side-by-side comparisons. This expansion aims to make Amazon’s shopping experience more seamless by answering shoppers’ questions in natural language, whether they’re looking for gift ideas or specific product advice.
Rufus has been trained on Amazon’s extensive data library, including product listings, customer reviews, and other public information. By integrating Rufus into Amazon’s Shopping app, the company is competing more directly in the AI space, a move that underscores its efforts to stay competitive with other tech giants. Users in newly added regions can now access Rufus by updating their Amazon app and selecting the chatbot icon, which activates an intuitive, chat-based interface.
While this initial version of Rufus is still in development, Amazon acknowledges that it may not yet be perfect but promises regular updates. The company is also investing in generative AI to enhance services for sellers, like automated listing descriptions. This broader AI strategy includes Amazon’s recent $230M investment in startups to drive further innovations in the field.
At TechCrunch Disrupt 2024, Ashton Kutcher, co-founder of Sound Ventures, shared his belief that every company will eventually incorporate AI, though he doubts there will be a single “winner” in the space. Kutcher emphasised the transformative potential of foundational AI models, which he views as essential to future innovation across industries. “There will not be a company in the world that is not, in some way, using AI,” he noted, adding that foundational companies in AI could become some of the most valuable in history.
Kutcher, alongside Sound co-founders Guy Oseary and Effie Epstein, explained that Sound Ventures is betting heavily on AI, with a $265 million fund backing major AI firms like OpenAI and Anthropic. Kutcher also shared that OpenAI’s CEO, Sam Altman, supported Sound’s multi-company AI investments, with the firm carefully maintaining confidentiality across its portfolio.
While some are apprehensive about AI’s rapid growth, Kutcher compared the technology’s potential impact to transformative past innovations like personal computers and cars. Advising founders, he highlighted the importance of strong teams over polished pitch decks, noting that real value lies in people, market insight, and breakthrough ideas.
Sierra, a young AI software startup co-founded by former Salesforce co-CEO Bret Taylor, has secured $175 million in new funding led by Greenoaks Capital. This latest round gives the company a valuation of $4.5 billion, a significant jump from its earlier valuation of nearly $1 billion. Investors such as Thrive Capital, Iconiq, Sequoia, and Benchmark have also backed the firm.
Founded just a year ago, Sierra has already crossed $20 million in annualised revenue, focusing on selling AI-powered customer service chatbots to enterprises. It works with major clients, including WeightWatchers and Sirius XM. The company claims its technology reduces ‘hallucinations’ in large language models, ensuring reliable AI interactions for businesses.
The rising valuation reflects investor enthusiasm for applications in AI that generate steady revenue, shifting from expensive foundational models to enterprise solutions. Sierra operates in a competitive space, facing rivals such as Salesforce and Forethought, but aims to stand out through more dependable AI performance.
Bret Taylor, who also chairs OpenAI’s board, co-founded Sierra alongside former Google executive Clay Bavor. Taylor previously held leadership roles at Salesforce and oversaw Twitter’s board during its takeover by Elon Musk. Bavor, who joined Google in 2005, played key roles managing Gmail and Google Drive.
Alphabet’s recent earnings report showcases a robust 35% surge in Google Cloud revenue for the third quarter, signalling a strong demand for AI-driven cloud computing and setting a promising tone for competitors Microsoft and Amazon. The jump, the fastest pace of growth in two years, has sent Alphabet’s shares up by 5.5%, reflecting investor optimism about the company’s expanding foothold in the cloud sector. Analysts had anticipated growth of around 29%, making this an even stronger-than-expected outcome for Google’s cloud division.
While Alphabet’s cloud segment remains smaller than Amazon’s AWS and Microsoft’s Azure, its performance has been noteworthy, accounting for 13% of Alphabet’s third-quarter revenue, up from 11% a year prior. This consistent growth aligns with Google’s continued investment in AI-powered tools and custom chips, like the Tensor Processing Unit (TPU), which have set it apart from competitors by enhancing cloud capabilities for AI applications. Analysts like Angelo Zino of CFRA Research believe Google may deliver the most impressive cloud growth numbers this quarter.
Google has been pouring resources into AI advancements across its cloud and search businesses, including its chatbot Gemini, which offers AI-generated code, data processing, and cybersecurity tools. These innovations, combined with the Vertex AI platform that enables custom model creation, have made Google Cloud a compelling choice for organisations seeking advanced AI solutions.
Investments in AI are also fueling Alphabet’s core advertising business, which rose 10% in the quarter, and supporting its broader cloud infrastructure expansion. Google has announced plans to invest billions in new data centres worldwide to strengthen its market presence and technological capabilities.
In its latest earnings call, Alphabet’s new CFO, Anat Ashkenazi, confirmed that capital expenditures in 2025 are expected to surpass this year’s, underlining the company’s commitment to scaling its AI and cloud capabilities. Analysts like Gil Luria of D.A. Davidson emphasise that Google Cloud’s outstanding performance in recent quarters showcases Alphabet’s success in turning AI investments into substantial revenue growth, solidifying its position in a competitive market.
Leaked details about Google’s upcoming Pixel 10 and Pixel 11 smartphones hint at significant upgrades powered by an advanced Tensor G5 chip, according to Android Authority. The Pixel 10, expected in late 2025, may introduce new AI-driven features, including ‘Video Generative ML’ for on-device video editing and a ‘Sketch-to-Image’ tool that turns hand-drawn sketches into fully rendered images. The chip could also allow users to run advanced AI models, like Stable Diffusion, locally through the Pixel’s image app.
A standout feature rumoured for the Pixel 11 is an ‘Ultra Low Light video’ mode that builds on Google’s Night Sight technology to improve video quality in dark settings. This feature could enable higher-quality low-light recording with better exposure control and image stabilisation, allowing clearer and more vibrant videos shot in near darkness.
Both devices are expected to support recording 4K HDR video at up to 60 frames per second, enhancing video quality. Google’s move to incorporate more powerful on-device AI tools, paired with upgraded hardware, points to a continued focus on image and video processing innovation, likely to appeal to users who prioritise smartphone photography and creative applications.
Universal Music Group (UMG) has announced a partnership with Los Angeles-based AI music company KLAY Vision to create AI tools designed with an ethical framework for the music industry. According to Universal, the initiative focuses on exploring new opportunities for artists and creating safeguards to protect the music ecosystem as AI continues to evolve in creative spaces. Michael Nash, Universal’s chief digital officer, emphasised the importance of ethical AI use for artists’ rights in a rapidly changing industry.
The collaboration comes as Universal Music faces ongoing legal battles with other AI companies, including Anthropic AI, Suno, and Udio, over the use of its recordings in training music-generating AI models without authorisation. These cases highlight the growing concerns surrounding AI technology’s impact on the creative sector, particularly with respect to artists’ rights and intellectual property.
With this partnership, Universal Music aims to establish AI technologies that support artists’ needs while navigating the complex ethical questions surrounding AI-generated music. By working alongside US based KLAY Vision, Universal hopes to shape the future of AI in music responsibly and to develop solutions that ensure fair treatment of artists and their work.
Apple announced that its Apple Intelligence AI suite will be available in the European Union starting in April 2025, with localised language support to follow. The AI-powered feature set, which includes advanced tools such as Writing Tools, Genmoji, and a redesigned Siri with ChatGPT integration, has until now been limited to US English. The delay in the European rollout was previously attributed to compliance requirements under the EU’s Digital Markets Act (DMA), which applies to certain digital platforms to ensure competition and user privacy.
With iOS 18.1, Mac users in Europe can already access Apple Intelligence features by switching their language settings, while iPhone and iPad users must wait until next April. The release will come with support for a dozen languages throughout 2025, including French, German, Italian, and Spanish, broadening accessibility for EU users.
Apple’s phased rollout underscores the tech giant’s efforts to adapt its products to EU regulatory standards while maintaining a consistent experience for European users. Although some features, like notification summaries, may not be available initially, Apple has committed to bringing as many AI capabilities as possible to European devices in future updates.
In a landmark case for AI and criminal justice, a UK man has been sentenced to 18 years in prison for using AI to create child sexual abuse material (CSAM). Hugh Nelson, 27, from Bolton, used an app called Daz 3D to turn regular photos of children into exploitative 3D imagery, according to reports. In several cases, he created these images based on photographs provided by individuals who personally knew the children involved.
Nelson sold the AI-generated images on various online forums, reportedly making around £5,000 (roughly $6,494) over an 18-month period. His activities were uncovered when he attempted to sell one of his digital creations to an undercover officer, charging £80 (about $103) per image.
Following his arrest, Nelson faced multiple charges, including encouraging the rape of a child, attempting to incite a minor in sexual acts, and distributing illegal images. This case is significant as it highlights the dark side of AI misuse and underscores the growing need for regulation around technology-enabled abuse.
San Francisco-based startup Untether has unveiled a new artificial intelligence chip, the 240 Slim, tailored for energy-efficient use in edge applications like autonomous vehicles and agricultural equipment. Unlike the large-scale data center chips produced by giants like Nvidia and AMD, Untether’s product is optimised to run pre-trained AI models, which means it focuses on inference, the process of applying existing AI models rather than training new ones.
As AI becomes more embedded in everyday technologies, demand for inference-focused chips is skyrocketing. Untether’s VP of product, Bob Beachler, anticipates the inference chip market to expand to $102B by 2027, far surpassing the training sector. The 240 Slim chip is built on the open-source RISC-V architecture, positioning it as a competitor to chips using Arm Holdings’ technology. Early tests by nonprofit MLCommons have shown promising performance results for Untether’s hardware.
Untether has already gained traction in the automotive sector; Mercedes-Benz plans to use Untether’s chips in its future autonomous vehicles. With these chips, the company aims to deliver cutting-edge performance with minimal power demands, a combination that could help drive innovation in autonomous tech, agriculture, and select data center applications.
