{"id":5163,"date":"2023-10-25T01:30:53","date_gmt":"2023-10-25T01:30:53","guid":{"rendered":"https:\/\/infundpros.com\/business\/microsofts-edge-in-ai-pays-off-while-google-tries-to-catch-up-in-the-cloud\/"},"modified":"2023-10-25T01:30:53","modified_gmt":"2023-10-25T01:30:53","slug":"microsofts-edge-in-ai-pays-off-while-google-tries-to-catch-up-in-the-cloud","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=5163","title":{"rendered":"Microsoft\u2019s edge in AI pays off while Google tries to catch up in the cloud"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=b20f9491-34b5-409c-b084-68169be6638c\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Microsoft received an unexpected financial boost from generative AI while Google struggled with sagging growth in a core part of its business as it ploughs money into the tech industry\u2019s hottest new technology, according to quarterly results released on Tuesday.<\/p>\n<p>The contrasting performance of two of the tech industry\u2019s biggest arch-rivals underlined the early lead Microsoft has taken in the AI race that broke out after the launch of ChatGPT late last year. <\/p>\n<p>Its shares rose 4 per cent on the earnings news, adding about $100bn to its stock market value, while Alphabet, Google\u2019s parent, lost about $100bn in market capitalisation as its shares slid more than 6 per cent in after-hours trading. <\/p>\n<p>\u201cMicrosoft was certainly in front of AI faster and they\u2019re monetising it well,\u201d said Brent Thill, an analyst at Jefferies. \u201cGoogle struggled.\u201d<\/p>\n<p>The companies\u2019 divergent fortunes came in the cloud computing market, which involves delivering IT services to customers over the internet. Microsoft reported an unexpected rebound in growth in its cloud computing platform, Azure, after a year in which many customers have been squeezing their cloud spending. <\/p>\n<p>The software company said it was still under pressure as users try to \u201coptimise\u201d their cloud work, but that new AI projects had more than outweighed this and brought a return to growth.<\/p>\n<p>Wall Street had been expecting a slowdown in Azure following the 27 per cent constant-currency growth of the preceding quarter. But growth instead rebounded to 29 per cent, or 28 per cent excluding the effects of currency movements, helping to lift Microsoft\u2019s overall revenue and earnings well ahead of forecasts.<\/p>\n<p>Meanwhile, growth in Google\u2019s cloud computing division sagged to 22 per cent, below the 26 per cent investors had expected. Although accounting for only 11 per cent of Alphabet\u2019s revenues, and despite better than expected results from in the company\u2019s advertising business, the cloud results were enough to dent Alphabet\u2019s stock after a 33 per cent run-up this year. <\/p>\n<p>Thill said that Google\u2019s big investments in AI meant that it would \u201cget back in\u201d and help it to become a force in the cloud computing market, but that for now, Microsoft was growing much faster, despite starting with a far bigger cloud business than Google. <\/p>\n<p>In a call with analysts, Microsoft chief executive Satya Nadella said his company was benefiting from its decision to build a single, unitary technology platform to support its AI services. It first invested $1bn in start-up OpenAI more than three years ago and has since put OpenAI\u2019s models at the core of its AI infrastructure, supporting a range of its own software applications as well as AI services for other companies.<\/p>\n<p>Amy Hood, chief financial officer, said that new business coming to Microsoft\u2019s cloud platform in the latest quarter was \u201cprimarily AI\u201d and that as a result the company was \u201ctaking share\u201d in the cloud business. <\/p>\n<p>Meanwhile, Alphabet chief executive Sundar Pichai called AI \u201ca foundational platform shift\u201d that would have benefits across the company\u2019s business. He said Google was \u201cworking through\u201d getting ready for the launch of Gemini, its next big AI model, which could help it leapfrog OpenAI in the race to power the next generation of AI services.<\/p>\n<p>Despite the pick-up from AI, Microsoft said growth in its cloud platform was likely to slip back slightly from its current level, though remain stable for the rest of its fiscal year, which ends next June. <\/p>\n<p>Overall, the software company reported revenue of $56.5bn, an increase of 13 per cent from a year ago, while earnings per share rose 27 per cent to $2.99. Wall Street had been expecting earnings of $2.65 a share on revenue of $54.5bn.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/b20f9491-34b5-409c-b084-68169be6638c\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Microsoft received&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-5163","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Microsoft\u2019s edge in AI pays off while Google tries to catch up in the cloud | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Microsoft received an\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=5163\" \/>\n<meta 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