Feb 2, 2024 - Business

Charted: How Microsoft's AI lead is showing up

Data: YCharts; Chart: Axios Visuals

Microsoft flaunted its head start in generative AI this week as Big Tech reported earnings.

Why it matters: Investors increasingly want to see more results than hype.

Driving the news: Microsoft's server and cloud business, which includes Azure, grew 30% in the last three months of 2023 from the prior year, according to its latest quarterly report.

  • Generative AI contributed a 6 percentage point bump within that figure, CFO Amy Hood noted on the call.
  • And UBS analyst Karl Keirstead described the boost as "just extraordinary."

Elsewhere, competitors and peers had less substance to offer.

  • Google and Alphabet CEO Sundar Pichai shared sparse financial details about its "thousands of product advances, including broad Gen AI capabilities."
  • Meta CEO Mark Zuckerberg reflected on 2023 as a year where he and his team "established [an] AI effort."
  • Amazon CEO Andy Jassy described last year as "very significant" for customer trials for Gen AI, but said associated revenue in the context of the $100 billion AWS business is "still relatively small."
  • And Apple CEO Tim Cook said the company will talk about its generative AI work "later this year."

The big picture: Any first-mover advantage may shrink over time, but for now, investors clearly see Microsoft as leading the generative AI race.

  • The company's market cap stands at nearly $3.1 trillion — while Apple's has fallen to $2.9 trillion.
  • The size of Alphabet, Amazon and Meta are all currently below $2 trillion.

💭 Hope's thought bubble: Any multiplier effects of AI may ultimately be difficult to measure.

  • After all, companies are not only building AI to improve customer-facing products, but also tools for employees to save time.
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