AI boom boosts Alphabet earnings, bumps Elon Musk’s xAI valuation

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The artificial intelligence craze is alive and well — at least, if Alphabet earnings and investments in Elon Musk’s new venture are any indication. 

Alphabet (GOOG and GOOGL) stock surged almost 7% in the first hour of trading Wednesday on better-than-expected earnings from Google’s parent company Tuesday evening. 

Alphabet said Tuesday its AI investments are “paying off,” as demonstrated by an increase in its Cloud and Search businesses, which jumped 35% and 12%, respectively, during Q3 2023. 

“This business has real momentum, and the overall opportunity is increasing as customers embrace gen. AI,” Google CEO Sundar Pichai said Tuesday of the company’s Cloud product. 

The earnings report comes as fundraising in the AI space continues to explode. 

Reports swirled yesterday that Elon Musk is in the midst of a funding round for xAI that would value the startup at around $40 billion. The news comes just months after the company closed a $6 billion round over the spring, which valued xAI at $24 billion. 

OpenAI earlier this month secured a $6.6 billion round, putting the company at a $157 billion valuation. 

On tap after the close today we have earnings reports from two more of the Mag 7: Meta and Microsoft. 

Analysts expect Meta to post an 18% increase in year-over-year revenue, largely driven by the company’s growing use of AI-driven advertising strategies. 

Microsoft’s third quarter report comes just after the company announced its GitHub product will bake in AI models from Anthropic and Google into its coding assistant. 

Should be an exciting day in after-hours trading. We’ll be back tomorrow unpacking all the details.

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