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AI revenue riddle: Azure sees gains, but when will other cloud titans see a surge? - SiliconANGLE

Oct 28, 2023 - siliconangle.com
The article discusses the impact of artificial intelligence (AI) on the earnings and productivity of major cloud companies like Microsoft, Google, and Amazon. It highlights that while AI is prevalent, it is not yet significantly reflected in these companies' earnings or productivity statistics. The article also notes investor confusion, with mixed reactions to Amazon's stock price following its earnings announcement. It suggests that despite AWS's growth and operating margins, some analysts are not excited due to its slower growth rate compared to Microsoft's Azure. The article also discusses the shifting budgets towards AI, with CEOs not allocating huge incremental dollars for AI but rather asking for ROI demonstrations before further investment.

The article further discusses the cloud operating model's dominance, with hyperscale cloud growth outpacing on-premises by a rate of four to five times. It notes Microsoft's lead in AI, which is reflected in its numbers, and predicts that AWS and Google will disclose a measurable revenue impact from AI in the fourth quarter. The article also highlights the potential growth of cloud leaders in AI, with IBM showing promise with watsonx and AWS expected to see accelerated momentum. Finally, the article suggests that generative AI will drive cloud demand and productivity, and expects an acceleration in Q4 cloud growth driven by gen AI.

Key takeaways:

  • Artificial intelligence (AI) is everywhere but generally not showing up in earnings numbers or productivity statistics yet, according to a Breaking Analysis report.
  • Microsoft's AI lead is showing in the numbers, with about a 300-basis point tailwind for Azure as a result of AI. AWS and Google are expected to disclose a measurable revenue impact from AI in the fourth quarter.
  • Microsoft is leading in the use of generative AI, followed by Google. Interest in Amazon is high, despite the company playing catch-up for the first time in the cloud era.
  • IBM's WatsonX is showing promise, and the company's strong consulting business gives it an advantage in the market. AWS is expected to see accelerated momentum following its re:Invent conference.
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