Microsoft and Amazon See Strong Growth Amid AI Investment Binge
Microsoft and Amazon, two of the largest companies in the world by market cap, have seen their stocks revived after a tough year following strong earnings reports. Both companies are investing heavily in artificial intelligence infrastructure, with Microsoft's Copilot AI assistant showing traction and Amazon's cloud division AWS posting its strongest growth in 18 quarters.
Microsoft has made significant progress with its AI strategy, with paid Copilot subscribers rising by 10 million to reach 30 million total. The company's Azure cloud division also saw revenue surpass $100 billion for the first time, up a whopping 43% year over year. This growth has addressed investor concerns and led 34 out of 35 Wall Street analysts to recommend buying Microsoft stock.
Amazon's AWS also stole the show in the quarter, with revenue beating analyst estimates by nearly $1.7 billion and growing 37% year over year. The company hiked its full-year capital expenditure projection to $220 billion due to surging memory costs, but Chief Executive Officer Andy Jassy remains optimistic about demand.
Both Microsoft and Amazon have similar upside scenarios, with Wall Street analysts predicting nearly 21% and roughly 23% gains respectively. However, there is still some risk involved, particularly if the AI investment doesn't pay off.