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Microsoft’s bets on generative AI boost Azure cloud business, as Alphabet’s Google Cloud disappoints
- Microsoft’s revenue from the Azure cloud-computing platform grew 29 per cent in the September quarter, beating estimates
- Sales growth of Alphabet’s Google Cloud ground to its slowest pace in at least 11 quarters, missing estimates
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Google parent Alphabet’s cloud business suffered as long-time rival Microsoft’s took off in the September quarter, demonstrating early signs that the Windows maker’s investment in artificial intelligence was paying off.
Alphabet’s shares fell 7 per cent in after hours trading on Tuesday. Microsoft’s rose 5 per cent.
The drop in Alphabet’s shares, despite it beating Wall Street estimates for overall profit and sales, showed investors wanted it to deliver gains in artificial intelligence (AI) and demonstrate it remained competitive against Microsoft’s Azure and Amazon.com’s AWS cloud businesses.
“While a single quarter doesn’t a major trend make, this quarter’s cloud results … suggest that Azure is gaining share against its competition,” said Bob O’Donnell, chief analyst at TECHnalysis Research.
“In addition, it could be that Microsoft’s very strong messaging on their Copilots and GenAI technology is getting companies to consider them in a more serious way.”
Microsoft has emerged as an AI front runner, largely due to its substantial investment into start-up OpenAI, the maker of hit product generative AI chatbot ChatGPT.
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