Cloud Computing Giants Deliver Strong Results Amid AI Boom

Amazon Web Services (AWS), Microsoft Azure, and Alphabet's Google Cloud are among the top beneficiaries of artificial intelligence (AI) investing. These cloud computing providers spend billions on data centers tailored for AI computing but expect to recoup their investment through rented computing capacity.

The 'big three' in this realm, Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOG) (GOOGL), recently reported impressive results, which shouldn't come as a surprise given their dominance. While Azure posted the weakest quarter among the three, it still grew 43%, outpacing AWS's 37% growth rate in Q1.

However, Google Cloud trumped them all with an unbelievable 82% revenue growth rate during Q2. This is partly due to selling custom AI chips to external customers and accounting for revenue from this division. When these results are stripped out, it's still the fastest-growing of the three.

The stocks appear reasonably priced, especially considering their growth potential over the next decade. Microsoft, with its solid but not spectacular cloud computing performance, offers a value play opportunity. Meanwhile, Alphabet and Amazon have nearly identical valuations, making them comparable investment options.