Microsoft Cloud Recovery outperforms its competitors…

Bloomberg – The race to rebound from a two-year slowdown in cloud computing spending puts Microsoft Corp (MSFT) ahead of its biggest rival, Amazon.com Inc. (AMZN) and Google (GOOGL).

Microsoft Azure cloud It saw a 29% increase in sales during the September quarterhigher than analysts’ expectations, partly due to corporate demand for new artificial intelligence products.

In its report for the same period, released on the same day this week, its parent company, Alphabet Inc, used more muted language, noting that cloud customers continue to cut costs.

For its part, Amazon.com announced on Thursday, October 26, that cloud revenues were somewhat lower than expected, while operating income was higher than analysts’ expectations.

Microsoft, which occupies second place in this market, behind Amazon and before Google, indicated that it has captured a market share in the cloud from its competitors, but it did not specify which ones.

After a series of wild investments during the pandemic, the so-called large companies devoted most of 2022 and 2023 to so-called “optimization”, that is, better use of already paid materials and looking for areas where they can save..

This means that major cloud providers are striving for large contracts in a more complex context, leading them to look for formulas to entice companies, among other things, by offering to integrate cutting-edge AI-based products that represent increasing inefficiency.

“The global market will be driven by the acceleration of workflows to the cloud,” he says. stefan slawinski, Exan Analyst at BNP Paribas. “CEOs make decisions based on their instincts, and at this time they remain cautious.”

A new interest in developing and running AI applications will almost certainly emerge It influenced recent corporate decisions About the cloud partner to sign with.

Microsoft offers ways to work with a number of AI tools and has gained a reputation as a leader in this burgeoning field due to its partnership with OpenAI, which created the popular ChatGPT content creation software.

Microsoft said this alliance helped foster the growth of new customers: a service called Azure OpenAI, which allows Microsoft cloud customers to use the startup’s technology for their own applications, It attracted more than 18,000 customers, up from 11,000. Microsoft has also invested $13 billion in OpenAI and serves as its cloud provider, so the company’s increasing need for computing power also benefits Microsoft.

Amazon, for its part, is trying to attract customers with a list of different options, in addition to a partnership with artificial intelligence developer Anthropic, which makes the Claude chatbot.

Google, which is owned by Alphabet, says it is a popular choice among large companies and startups in the field of artificial intelligence, and the CEO says, Sundar Pichai He said in a conference call that More than 60% of the world’s 1,000 largest companies are Google Cloud customers, In addition to “funding more than half of the startups in the field of artificial intelligence.”

Amazon CEO, Andy Jassy, Generative AI represents a “tens of billions” of dollars opportunity for Amazon Web Services, the company’s cloud unit, which he led in his previous role, he told analysts on a conference call for the e-commerce giant on Thursday.

growth toAWS revenue was 12%, roughly the same pace as the previous quarter. But operating income was about $1.3 billion higher than analysts had expected, pushing the cloud unit’s operating margin, which tends to account for all of a company’s profits, to the highest level since the first quarter of 2022.

In a conference call with reporters, Amazon’s CFO said: Brian OlsavskySome companies are still working on “optimization,” he said, but the pace is “starting to slow down.”

Some companies are making new commitments to AWS (Amazon Web Services) or resuming projects that were previously paused, he said.

In a subsequent call with analysts, the company said several new agreements with customers were signed late in the third quarter and would not be reflected as revenue until the current period. The comments helped push Amazon shares higher in late trading Thursday.

At Microsoft, 29% increase in sales of Azure cloud services It outpaced the previous quarter’s growth by 26%, sending the company’s shares soaring in New York trading the next day.

CFO Amy Hood said that although “improvement trends” were similar to the previous quarter, consumption (a measure of the number of Azure services used) was better than expected and the company saw growth in the number of contracts worth more than $10 million. For Azure and Office cloud services.

Google’s cloud unit, which includes both types of infrastructure services that are part of AWS and Azure and aggregates the deliverables of productivity software, It witnessed a growth of 22% during the quarter compared to the previous year.

This is a slowdown in growth compared to the previous quarter. Unit sales were $8.4 billion, below Wall Street expectations of $8.6 billion. the Profits also came in below estimates.

alphabet head, ruth borat, He said in an interview that unit sales were affected by belt-tightening by some customers. Shares fell 9.5% the next day, their biggest decline since March 2020.

“Cloud computing is a much more complex business than advertising, and Google faces stiff competition,” he said. Max Wellens From internal intelligence. “While its appeal among AI startups may pay off in the long run, it is not currently helping Google Cloud enough to satisfy investors.”

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