Microsoft catches up to Amazon Web Services in the AI sector

The development of artificial intelligence (AI) is largely based on cloud infrastructures provided by technology giants such as Microsoft and Amazon. Microsoft Azure and Amazon Web Services (AWS) operate central data centers equipped with chips from leading vendors like Nvidia, offering their computing power to developers to create AI applications. Developers can also access pre-built large language models from leading AI startups such as OpenAI and Anthropic, which are available via Azure and AWS, thereby accelerating their progress. AWS is the world's largest provider of cloud services and infrastructures, followed by Azure in second place. However, in the last quarter, Azure achieved revenue growth of 29%, with eight percentage points attributable solely to AI. During the same period, AWS's revenue grew by only 19%. This trend is notable as the gap between the two cloud providers is becoming increasingly smaller. Although Microsoft does not specify the exact revenue generated by Azure, it recently reported that the cloud platform accounts for about half of the company's total cloud revenue. In the last quarter, Microsoft Cloud generated revenue of $36.8 billion, suggesting that Azure earned approximately $18.4 billion. Thus, Azure still has a long way to go to catch up with AWS, which posted revenue of $26.3 billion last quarter. However, with the current growth difference of 10%, Azure could overtake AWS within five years—possibly even sooner—especially if the growth gap widens again as it did earlier this year. Microsoft positioned itself early in the AI race by announcing a $10 billion investment in OpenAI in 2023. OpenAI's latest GPT-4 models, which are among the best in the industry, are now available on Azure and could be a decisive factor for developers when choosing a cloud provider. Before you invest in Microsoft shares, consider the following: The analyst team at The Motley Fool Stock Advisor has just identified what they believe are the ten best stocks for investors to buy right now, and Microsoft wasn't one of them. The ten selected stocks could yield significant returns in the coming years. For example, Nvidia was on this list on April 15, 2005. If you had invested $1,000 following our recommendation back then, it would be worth $657,306 today! Stock Advisor offers investors an easy-to-understand success guide, including instructions for building a portfolio, regular updates from analysts, and two new stock recommendations per month. The Stock Advisor service has more than quadrupled the S&P 500's return since 2002. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of The Motley Fool. Anthony Di Pizio owns none of the aforementioned stocks. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.