Why is Microsoft soaring while Amazon sinks? AI growing pains

Core Insights - Microsoft reported strong financial results, with a notable connection to artificial intelligence, leading to a surge in its share price by up to 9% after market close, briefly valuing the company at $4 trillion [2] - In contrast, Amazon's cloud division, AWS, reported revenue that exceeded estimates but showed slower growth, resulting in an 8% drop in share price [4][9] - Analysts expressed concerns about AWS's competitive position in the generative AI space, highlighting faster growth among competitors [4][5] Microsoft Performance - Microsoft achieved a remarkable quarter, with Azure revenue reaching $75 billion, reflecting a 34% year-over-year growth [12] - The company has invested over $88 billion in capital expenditures in the past year and plans to spend an additional $30 billion by the end of September [10] - Microsoft’s cloud growth has been a key focus under CEO Satya Nadella, marking a significant milestone for the Azure division [11][12] Amazon Performance - AWS reported $30.8 billion in revenue for Q2, showing an 18% year-over-year growth, which is significantly lower than Microsoft and Google’s growth rates of 39% and 32% respectively [9] - CEO Andy Jassy defended AWS's growth, attributing slower growth rates to the larger revenue base compared to competitors [7] - Despite AWS being the largest cloud provider, concerns about market share loss and competition in AI have affected investor sentiment, leading to a decline in stock price [4][8]