Microsoft Gets Another Leg Up on Google in AI Race

livemint.com:

Big tech’s two early movers on artificial intelligence both still have a way to go before the much-hyped technology starts generating significant business. But if their latest quarterly results are any indication, it may be Microsoft’s game to lose. Microsoft and Google-parent Alphabet both saw improvements to their core businesses during the September quarter according to results posted by both companies late Tuesday.

Google’s advertising revenue grew 9% year-over-year to $59.6 billion during the quarter, beating Wall Street’s expectations and up notably from the 3% growth reported for the June period. That was helped by a notable pickup in YouTube’s advertising revenue, which jumped 12% for its quickest pace in nearly two years. It probably isn’t a coincidence that this was during a period in which Hollywood’s crippling labor strikes resulted in fewer new TV shows and movies being released.

But it was a different story for Google’s cloud business, where revenue grew 22% year-over-year to $8.4 billion. That was 3% below Wall Street’s forecasts and contrasted sharply with the trend for Microsoft’s much larger cloud business, where the company’s Azure public cloud service saw revenue jump 29% to an estimated $16.7 billion during the same quarter. Azure’s growth was up 3 percentage points from the June quarter, while Google Cloud lost six points of growth in the same period.

Microsoft’s results also showed strength in other areas. The sharp drop in PC sales seen earlier this year has moderated, giving a strong boost to the operating earnings for Microsoft’s segment that includes its Windows operating system. The segment, which contains the company’s broad suite of business software, delivered its highest operating margin