Microsoft could soon overtake Amazon's cloud services dominance as the tech giant only continues to build on its artificial intelligence-powered lead in the industry.
As reported by Reuters, the upcoming quarterly reports for both companies could shed light on the closing gap between Microsoft and Amazon.
Its Thursday earnings release will serve as a gauge for the adoption of AI and may impact the movement of technology stocks as this month's advance in the industry slows down due to concerns that interest rates in the US may remain high for an extended period.
Analysts on Wall Street anticipate that Microsoft, which surpassed Apple to become the most valuable company in the world earlier this year, will reveal that its billion-dollar investments in generative AI were drawing customers to its Azure cloud computing service.
(Photo: Alexander Koerner/Getty Images) HANOVER, GERMANY - APRIL 17: The logo of Microsoft is seen at the 2023 Hannover Messe industrial trade fair on April 17, 2023 in Hanover, Germany. Over 4,000 companies, primarily from the energy and engineering sectors, are exhibiting at the fair, with an emphasis on digitalization, connectivity and climate neutrality.
Microsoft is predicted by Rishi Jaluria of RBC Capital Markets to overtake Amazon's market share. According to Jaluria, cloud providers should generally profit from indications that technology investment, which has been under pressure from rising interest rates and unstable economic conditions, is stabilizing.
Microsoft is expected to have expanded its revenue by 15% in the first three months of 2024, while Alphabet is forecast to have grown at its second-highest rate in over two years -12.6 %. Revenue for Amazon may increase by 11.9%, which would be a three-quarter low.
Visible Alpha believes that Azure, a division of Microsoft's Intelligent cloud subsidiary, grew by 28.9% between January and March of this year. According to LSEG data, it contrasts with projected growth of 14.9% for Amazon Web Services and 25% for Google Cloud, the third-largest cloud provider.
Amazon releases its profits on April 30 and Google's parent company Alphabet on Thursday. According to CFRA Research analyst Angelo Zino, AI services may account for as much as 8 percentage points of Azure's growth.
Read Also: Microsoft Unveils New "Dramatically Cheaper" AI Model
Microsoft AI Deals
Consequently, Microsoft recently announced its new Coca-Cola deal that sees $1.1 billion being committed by the beverage maker to the tech giant's AI services.
The collaboration demonstrates Coca-Cola's ongoing technology revolution, which is backed by Microsoft Cloud, the business's strategic cloud and artificial intelligence platform of choice worldwide.
The partnership will enable the companies to test innovative new technologies such as Azure OpenAI Service and develop innovative, generative AI use cases for a range of business applications.
This entails investigating how Copilot for Microsoft 365 might increase workplace efficiency.
Amazon's Confidence in AI
While Microsoft could soon overtake Amazon thanks to AI, Amazon CEO, Andy Jassy remained confident in the company as per the recent annual shareholder letter.
The company's cloud computing subsidiary, Amazon Web Services, is already the foundation of many global digital enterprises, and Jassy thinks a big chunk of this revolutionary AI will be developed on top of it.
The company's primary focus, he continues, is not on building consumer-facing applications to directly compete with well-known tools like OpenAI's ChatGPT, but rather on creating the underlying "foundational" AI models for enterprise clients, which presently include Pfizer, Siemens, and Delta Air Lines.
Related Article: UK Competition Regulators to Investigate Microsoft and Amazon AI Deals
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