Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) and Microsoft Corp. (NASDAQ: MSFT) are positioning AI agents as a core layer of their products and making security and governance central to the pitch, but their plans for monetizing them differ. Microsoft is moving toward usage-based billing, while Google plans to extend agents to consumer products and sees an advertising opportunity, according to the companies’ latest earnings calls.
Microsoft pushes usage-based billing, Google eyes ads
Microsoft CEO Satya Nadella said the company thinks of its AI product Copilot “as the new OS for work” and that its “business model is expanding from per-seat subscriptions to include consumption.” Nadella said on the company’s fiscal first quarter earnings call that the number of Copilot customers consuming credits through usage-based billing “grew over 75% over the quarter.”
Nadella said that with Agent 365, the company provides a platform for AI observability, which helps customers to manage and optimize the performance and cost of their agents. He added that “over 50 million agents are now in the registry,” up more than 30% from the previous quarter. He described Microsoft’s security approach as “to separate intelligence from authority.”
Responding to Morgan Stanley analyst Adam Wood’s question on whether Azure efficiency or monetizing more layers of each workload would drive returns, Nadella said Microsoft looks at “all of this as the same infrastructure.” He said agent work is registered in Agent 365. The leverage, Nadella said, “is going to come from every one of them, and it compounds when we work them across.”
Meanwhile, Alphabet CEO Sundar Pichai said on the company’s third-quarter earnings call that Google focused first on enterprise agents “because the bar for security, safety and governance is extremely high.” As a next step, he said, the company is bringing the features to Search and “to our billion users on the Gemini app.” He added that “Agents will operate as a unifying layer across our products,” including Chrome, Android and Workspace.
Responding to Morgan Stanley analyst Brian Nowak’s question on bringing agents to all users, Pichai said Google will bring the enterprise experience to consumers later this year, “obviously starting with 1 billion users in our Gemini app.”
In addition, while responding to Bank of America analyst Justin Post’s question on agentic search and monetization, Alphabet Chief Business Officer Philipp Schindler said Google views agentic experiences as “clearly additive” while separately noting that he was “really excited about the advertising opportunities in an agentic world.”
Alphabet Misses Revenue Estimates, Microsoft Beats
The Google parent reported third-quarter revenue of about $127.58 billion, missing analyst estimates of $128.20 billion, according to Benzinga Pro. Shares of the company tumbled about 9.75% to $290.52 after hours on Wednesday.
Alphabet said Gemini models now process nearly 32 billion API tokens per minute, and the Gemini app now has over one billion users, making it the fastest-growing product in the company’s history.
Microsoft reported first-quarter revenue of $92.28 billion, up 19% year-over-year, which beat analysts’ estimate of $90.66 billion, according to data from Benzinga Pro. Revenue from the Agents and Infra segment surged 25% year-over-year to $76.8 billion.
Shares of Microsoft rose 2.88% to $546.30 after hours on Wednesday. Year-to-date, the stock has gained 9.80%.
See More:
Top Value Stocks
Image via Shutterstock
Recent Comments