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Home » News » Microsoft’s AI Boost Helps Cloud Business Outpace Rivals Amazon and Google in Latest Quarter

Microsoft’s AI Boost Helps Cloud Business Outpace Rivals Amazon and Google in Latest Quarter

Microsoft's emphasis on AI and its rapid growth in the cloud division has helped it outpace competitors like Amazon and Google in the latest quarter. This reflects the increasing importance of AI in the cloud computing industry, with all major players striving to stay ahead in this evolving landscape.

francoise hardy by Françoise
Sunday, 29 October 2023, 3:07 AM
in News
Microsoft AI boost Cloud business

Microsoft AI boost Cloud business

In the latest tech earnings reports for the third quarter, Microsoft’s cloud division demonstrated remarkable growth, with its Azure platform expanding by 29%. This growth outpaced the competition, as Google Cloud reported a 22% increase and Amazon Web Services (AWS) lagged with only 12% growth. Although AWS remains the leader in overall market share, Microsoft’s success in this quarter can be attributed to the increasing demand for artificial intelligence (AI) tools and services on its Azure platform.

 Must Read: NVIDIA Research Unveils Eureka: AI Breakthrough in Robot Learning with  GPT 4 LLMs

Microsoft’s AI prowess has positioned it as a preferred choice for businesses looking to run AI projects. The company already provides the underlying computing power for popular AI applications like the ChatGPT chatbot and other products developed by OpenAI, which Microsoft has been funding since 2019. Microsoft CEO Satya Nadella highlighted this trend, stating that “AI projects are not just about AI meters; they have lots of other cloud metres as well.” Around 3 percentage points of Azure’s growth in the third quarter were linked to AI, exceeding the 2 points forecasted by management. This growth also accelerated from the previous quarter, where it was at 26%, while Google’s growth rate slowed from approximately 28%. AWS remained consistent with its second-quarter growth.

Must Read: Google for India 2023 Highlights: 5 announcements to boost India New Age Technologies

Analysts from Bernstein Research, led by Mark Moerdler, see Microsoft’s results as a sign that it has taken the AI lead from Google. They suggest that Azure could become a bigger and more important hyperscale cloud provider than AWS. One notable indicator of Microsoft’s success is its increased capital expenditures, rising to $11.2 billion from $10.7 billion in the previous quarter.

While Microsoft is growing faster than its main competitors, all three companies are emphasizing the importance of AI. Google’s CEO, Sundar Pichai revealed that more than half of all funded generative AI startups are customers of Google Cloud. Amazon’s CEO, Andy Jassy acknowledged the rapid growth of generative AI within AWS, stating that it’s a significant business for them. Companies like Adidas, Booking.com, Merck, and United Airlines are already building generative AI applications in AWS.

Must Read:Apple Preparing Smarter Siri and Generative AI Features for Launch Next Year

Although all major cloud providers are recognizing the importance of AI, Microsoft seems to have positioned itself as the leader in this domain. Azure OpenAI Service, which opened to the public in January, was ahead of Amazon’s Bedrock service, which became available in September.

In the cloud computing landscape, Oracle is emerging as a new challenger, reporting 66% growth in the August quarter. Notable clients like Maersk, Skanska, and Starbucks have contributed to Oracle’s cloud business growth.

However, all major cloud providers are still contending with clients’ cost-saving initiatives, termed “optimization.” This trend began last year as companies had to adapt to economic uncertainties amid rising inflation. On Amazon’s earnings call, the term “optimize” or its variants were mentioned over 20 times, emphasizing the importance of cost-saving measures. Brian Olsavsky, Amazon’s Chief Financial Officer, noted that the rate of cloud cost optimizations has been slowing down, indicating a changing landscape for cloud service providers.


Must Read: Meta Introduces Two WhatsApp Accounts on One Phone for Seamless Professional and Personal Messaging

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francoise hardy

Françoise

Francoise Hardy, A digital content creator and tech integration specialist with over 10 years of experience, is known for his deep knowledge in AI, ML, Data Science, Robotics, and Neural Networks. He began his career with a passion for emerging technologies, leading to innovative solutions and digital transformation in various businesses. Francoise's expertise extends to the ethical aspects of technology, advocating for responsible usage. Recognized by his peers, he is a sought-after speaker and writer in the tech industry. His commitment to advancing technology for societal benefit defines his career.

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