Microsoft Azure Nearing Victory in the AI Race Microsoft Azure Nearing Victory in the AI Race

Written By Michael Gary Scott

Most AI development emanates through the cloud, with tech titans such as Microsoft and Amazon leading the charge. These tech giants, through Microsoft Azure and Amazon Web Services (AWS), operate central data hubs teeming with processing power sourced from industry stalwarts like Nvidia. They lease out this computational might to developers, facilitating the creation of AI applications.

Moreover, developers on Azure and AWS can tap into pre-built large language models, including those from premier AI startups like OpenAI and Anthropic, to expedite their endeavors.

AWS stands as the globe’s foremost cloud services and infrastructure provider, with Azure in a close second. However, Azure recently saw a 29% revenue surge in the last quarter (ending June 30), with a significant chunk of that attributed to AI alone. In contrast, AWS only experienced a 19% revenue uptick in the same period, showcasing a consistent trend:

A line chart of Microsoft Azure's revenue growth compared to that of Amazon Web Services.

Although Microsoft doesn’t actively disclose Azure’s revenue numbers, it recently divulged that the cloud platform accounted for roughly half of its “Microsoft Cloud” earnings. In its most recent period, Microsoft Cloud racked up $36.8 billion, hinting that Azure likely generated around $18.4 billion.

While Azure has ground to cover to reach AWS, which amassed $26.3 billion in revenue in its latest quarter, the existing 10% growth divergence suggests Azure might outpace AWS in the next five years – potentially sooner if the growth margin expands to levels witnessed earlier this year.

Microsoft stormed into the AI race early on by pledging a $10 billion investment in OpenAI in 2023. The startup’s latest GPT-4o models rank among the industry’s finest, now accessible on Azure. This can be a pivotal factor for developers weighing their cloud provider options.

See also  Options Trading on the Rise with MSTR, MSFT, and COIN

Considering an Investment in Microsoft?

Before delving into Microsoft stock, consider this:

The analyst team at Motley Fool Stock Advisor recently pinpointed what they believe to be the 10 top stocks for potential investors… and Microsoft did not make the list. The ten chosen stocks carry the promise of significant returns in the near future.

Reflect on the scenario when Nvidia hit this list on April 15, 2005… imagine if you had invested $1,000 following our recommendation; you would have $615,516 today!*

Stock Advisor equips investors with a user-friendly roadmap to success, offering insights on portfolio construction, analyst updates, and two fresh stock picks monthly. The Stock Advisor service has outperformed the S&P 500 by more than fourfold since 2002*.

Explore the 10 stocks »

*Stock Advisor returns as of July 29, 2024