Microsoft's AI bets boost cloud business, Alphabet yet to find silver lining

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Google-parent Alphabet's (GOOGL.O) cloud business suffered as long-time rival Microsoft's (MSFT.O) took off in the September quarter, demonstrating early signs that the Windows maker's investment in artificial intelligence was paying off.

Google Cloud revenue growth slows, misses estimatestook off in the September quarter, demonstrating early signs that the Windows maker's investment in artificial intelligence was paying off.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 and demonstrate it remained competitive against Microsoft's Azure and Amazon.

Microsoft has emerged as an AI frontrunner, largely due to its substantial investment into startup OpenAI, the maker of hit product generative AI chatbot ChatGPT. Microsoft's chief financial officer Amy Hood said on a conference call with analysts that higher-than-expected AI consumption was responsible for a 3 percentage point boost to its cloud business.

RBC Capital Markets has previously estimated that Microsoft will clock over $3 billion in revenue from generative AI offerings this fiscal year.

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