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Alphabet’s Cloud Woes, Microsoft’s AI Wins

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Alphabet’s Cloud Woes, Microsoft’s AI Wins

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Alphabet's Cloud Woes, Microsoft's AI Wins. Alphabet took a tumble on Wednesday as its cloud unit's growth hit a slump, leaving investors feeling a

Alphabet's Cloud Woes, Microsoft's AI Wins
Alphabet's Cloud Woes, Microsoft's AI Wins
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Alphabet’s Cloud Woes, Microsoft’s AI Wins


Alphabet’s Cloud Woes, Microsoft’s AI Wins – Oh, Alphabet, how the mighty have fallen! The tech giant’s stock, Saham Alphabet, is taking a nosedive as Microsoft continues to expand its cloud dominance. But what’s got investors worried? Well, it seems like the folks at Redmond have set their sights on conquering the next frontier: AI. And not just any AI, mind you, but OpenAI, the cutting-edge artificial intelligence project that has been turning heads in the tech world. As Alphabet struggles to find its footing in the cloud market, Microsoft swoops in with a strategic move that could leave their competitors eating their dust. It’s a classic tale of the underdog rising to the top, or in this case, the “alphabet” getting scrambled by Microsoft’s savvy moves. So sit back, grab your popcorn, and let’s dive into the fascinating world of Alphabet’s cloud woes and Microsoft’s AI wins.

Alphabet took a tumble on Wednesday as its cloud unit’s growth hit a slump, leaving investors feeling a little blue compared to the soaring success of Microsoft. These tech giants are locked in a fierce race to capitalize on generative artificial intelligence, but Alphabet seems to be lagging behind.

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Shares of Alphabet plunged 9.6% on Wednesday, while Microsoft experienced a healthy 2.8% gain. This raised concerns among investors that Google’s parent company might lose ground to Microsoft in the competitive cloud-computing market. The growth of Alphabet’s cloud unit was hampered by its reliance on smaller clients, unlike Microsoft, which saw a surge in growth driven by cloud spending from businesses preparing to roll out AI features on its Azure platform.

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While Microsoft focuses on its core business clients that already utilize its software services, Google has turned its attention to startups. Morningstar analyst Ali Mogharabi remarked, “Demand for artificial intelligence drove Microsoft’s growth. While the needs of Googles biggest customers are similar the company is more exposed to high-growth and startup customers that are more aggressively controlling costs.

The decline in Alphabet’s shares suggests that investors worry about the delayed earnings boost resulting from the slow roll-out of AI services targeted at startups. However, Google Cloud does offer AI capabilities through its Vertex platform, and the company’s DeepMind team is shifting its focus from AI research to product releases as they compete fiercely with rivals like Microsoft.

Google plans to launch a series of AI models next year, including the highly anticipated Gemini. But analysts wonder if this timeline leaves room for Microsoft to capture more market share with OpenAI’s GPT-4 model already available. Apart from its in-house model solutions, Google has invested in AI startup Anthropic and partnered with Meta’s Llama models, aiming to offer a variety of models to its cloud users. Nevertheless, whether Google’s strong research and technical capabilities can win over big-ticket enterprise customers from the likes of Microsoft and AWS remains to be seen.

Krishna Chintalapalli, portfolio manager at Parnassus Investments, stated, “Microsoft is using its incumbent software relationships, whereas Google is coming in as a little bit of a challenger here.” It seems that cloud spending is primarily driven by enterprise clients, while smaller businesses are cutting back on expenditure.

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Microsoft’s strong AI adoption resulted in a 3 percentage point boost to its cloud business in the September quarter. CEO Satya Nadella revealed that about 40% of Fortune 500 companies were already utilizing the test version of its “Copilot” AI service, powered by OpenAI’s technology. With plans to launch this service next month for its 365 offering, Microsoft aims to provide users with a quick summary of a day’s worth of emails for a monthly fee of $30.

Interestingly, brokerage D.A. Davidson praised Microsoft, stating, “Unlike many others who are touting their AI story, Microsoft is capable of delivering meaningful AI products to their customers.” As a result, at least 22 brokerages have raised their price targets on the software giant, predicting its stock price will reach $400 – an increase from its current price of $340 per share.

While analysts expressed optimism about Alphabet’s core search business, they cautioned that weaknesses in its cloud division would persist. Its unclear how extensive Googles cloud optimization efforts will be or how far along its customers are in the process but headwinds are expected to persist for at least several quarters Bernstein analysts said. warned.

Alphabet's Cloud Woes, Microsoft's AI Wins
Alphabet’s Cloud Woes, Microsoft’s AI Wins

Despite these challenges, AI is expected to become a major growth driver for Alphabet in 2023 with the launch of Gemini, a collection of large-language models. CEO Sundar Pichai hailed the early results of Gemini as “very promising,” providing some hope for Alphabet’s future prospects in the AI arena.


In this fierce battle for AI dominance, only time will tell whether Alphabet can catch up to Microsoft and secure its share of the cloud-computing market. Until then, investors will be closely watching these tech giants as they navigate the exciting yet unpredictable world of generative artificial intelligence.

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