Summary:
- Microsoft reports 27% growth in Azure, but investors hoped for higher figures to capitalize on generative AI potential.
- The company's aggressive push into AI integration across sectors draws market attention.
- Tech companies now face scrutiny in the prove-it phase for generative AI claims.
- Alphabet sees gains in shares, driven by advertising and solid growth in their cloud offering.
- Ruth Porat's departure as CFO raises questions about Alphabet's future financial leadership.
Microsoft, often dubbed the 'Death Star' of technology, is witnessing a slowdown in its cloud growth despite beating expectations on top and bottom-line figures. The company's focus on Azure and generative AI has left investors somewhat disappointed as the enterprise continues to optimize its cloud spend. While expectations for immediate monetization of generative AI may be unrealistic, Microsoft's aggressive push into AI integration across various sectors is being closely watched by the market.
During the recent quarter, Microsoft reported 27% growth in Azure, meeting its guided range. However, some investors were hoping for a higher figure to capitalize on the potential of generative AI. The optimization phase for cloud spend is likely influencing these results, and it may take time before generative AI's impact is fully realized in the company's bottom line. Microsoft's stock has surged by 46% this year, prompting discussions about a possible healthy pullback.
The tech industry is now past the hype phase for generative AI and moving into the prove-it phase. Companies claiming to be generative AI players will face scrutiny, and only those with robust infrastructure and ample resources are expected to thrive. Meanwhile, Alphabet's shares have seen gains, driven by improvements in advertising and solid growth in their cloud offering (GCP). The departure of Ruth Porat as CFO of Alphabet raises questions about the future financial leadership of the company.