Tech giants’ shares surge after stronger-than-expected earnings.

Google and Microsoft have reported double-digit profit increases, buttressing the case for the tech giants’ heavy investment in artificial intelligence (AI).

The quarterly results announced on Thursday by Google parent Alphabet and Microsoft came in ahead of expectations, sending their shares 11 percent and 4 percent higher, respectively, in after-market trades.

Alphabet reported a profit of $23.7bn in the first three months of the year, a rise of 57 percent.

The Silicon Valley giant also announced its first-ever dividend, at $0.20 per share.

Google chief Sundar Pichai said AI text-to-image model Gemini had helped drive the company’s solid earnings.

“Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation,” Pichai said.

Microsoft reported a quarterly profit of $21.93bn, up 20 percent.

The strong showing comes after rival Meta, the owner of Facebook and Instagram, lost $200bn of its market value on Wednesday after CEO Mark Zuckerberg warned of higher expenses due to investment in AI.

The earnings come as Google, Microsoft, Amazon and other major players in AI are being scrutinised by regulators in the United States and Europe.

In January, the US Federal Trade Commission launched an inquiry into whether multibillion-dollar partnerships between Microsoft, Amazon and Google and the start-ups OpenAI and Anthropic harmed competition.

The European Commission in March opened a probe into tech giants’ management of the risks associated with AI, including computer-generated deepfakes.