Microsoft Took Market Share from Google. How AI Is Changing Cloud Competition.

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Microsoft’s Azure impressed where Google Cloud disappointed and the reason behind the divergence looks to be in artificial intelligence.

Microsoft and Google-parent Alphabet compete directly in cloud computing — providing IT services remotely over the internet. The latest figures suggest Microsoft is winning market share from its rival, with analysts pointing to demand for its AI capabilities as the cause.

The companies also differed in the breakdown of AI related figures they were prepared to share. Microsoft was happy to break out the AI contribution to its cloud business, noting it represented three percentage points of Azure’s overall 28% growth in the September quarter from the same period a year earlier, showing accelerated growth.

“While management notes Google Cloud Platform continues to grow faster than reported results, we believe limited disclosures are creating concerns that Google lost share to Microsoft Azure,” wrote KeyBanc analyst Justin Patterson. The question now is whether Alphabet can convince the market its cloud-computing platform will be competitive with Microsoft’s OpenAI-powered offering. Alphabet CEO Sundar Pichai said the company was just laying the foundation of the next generation of AI models that it intends to launch throughout 2024 and the company was seeing a lot of interest in the technology.

 

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