- Microsoft’s quarterly reports may reveal its progress in closing the gap with Amazon in cloud computing.
- The company’s investment in generative AI, including Copilot, is attracting businesses to its Azure cloud service.
- Analysts anticipate Microsoft’s AI strategy to influence technology stock movements amid market uncertainties.
Microsoft is poised to unveil its progress in cloud computing dominance against Amazon as it integrates advanced generative AI features into its services. The upcoming quarterly reports from tech giants serve as a litmus test for Microsoft’s prowess in the realm of artificial intelligence.
Microsoft’s AI strategy and cloud market momentum
As quarterly reports from U.S. tech giants loom, the spotlight shines on Microsoft’s remarkable ascent in the cloud-computing sphere, signaling a potential challenge to Amazon‘s long-standing dominance.
Microsoft, headquartered in Redmond, Washington, has leveraged its robust suite of generative AI features, notably the Copilot toolset, to entice businesses towards its Azure cloud platform.
“Azure is benefiting from a halo effect around Microsoft’s AI strategy,” said RBC Capital Markets Rishi Jaluria, who expects Microsoft to take Amazon’s market share.
Also read: Microsoft launches lightweight AI model Phi-3-mini
Azure’s growth and AI adoption
Analysts are bracing for Microsoft’s earnings report, anticipating a resounding confirmation of the company’s exponential growth trajectory.
Azure, a pivotal component of Microsoft’s Intelligent Cloud division, is forecasted to have surged by an impressive 28.9% in the January-to-March period. A significant catalyst fueling this surge is the widespread adoption of AI services, with the Copilot suite serving as a linchpin for many enterprises seeking to harness the power of AI in their operations.
Angelo Zino, an analyst at CFRA Research, estimates that up to 8% points of Azure’s growth could be directly attributed to the uptake of AI services, signaling a deepening integration of AI within cloud computing infrastructures.
Also read: Amazon offers free credits to startups to use AI models
Google and Amazon’s response to AI integration
While Google remains optimistic about its AI endeavors, industry analysts caution against expecting an immediate surge in AI integration within Google Cloud.
“Our checks at Google Cloud Next conference showed high interest levels and abundant innovation, but no rush to turn AI pilots into production apps,” said analysts at Jefferies, who see a more meaningful boost in 2025.
Despite Alphabet‘s significant strides, particularly with its Gemini models, the pace of AI monetisation within Google Cloud is projected to be more measured. In contrast, Amazon, through its AWS arm, is quietly integrating AI capabilities, building upon its $4 billion investment in OpenAI-competitor Anthropic.
“Microsoft has gained a lot of ground last year based on its AI prominence, but AWS is still a much bigger business and we expect Amazon to catch up to those capabilities over the next couple of years,” said D.A. Davidson and Co analyst Gil Luria.
