Alphabet Takes the Lead as Cloud Computing Dominates Tech

The tech giants Alphabet (GOOG +0.46%) and Microsoft (MSFT +0.90%) have recently posted impressive results, but which one is doing better? Both companies have a strong cloud computing business unit, with massive exposure to rising AI computing needs.

Alphabet's business model is more focused on advertising, particularly through the Google Search engine. While advertising has been strong lately, it tends to decline during times of economic uncertainty. Microsoft, on the other hand, has built a software empire used by businesses and consumers around the globe.

From a growth standpoint, Alphabet has the edge. In the second quarter, Alphabet's revenue increased by 24% year over year, with its Google Cloud division seeing an astonishing 82% revenue growth. Microsoft posted an admirable 18% revenue growth, with Azure (its cloud computing division) seeing 43% growth.

Despite Microsoft being slightly cheaper, I think it's clear that Alphabet is the better stock to buy. Its cloud computing division is growing far faster than Microsoft's, and its growth rate is accelerating rapidly.