Microsoft, Google report booming AI revenue as the tech reshapes business

Dive Brief:

• Microsoft and Google attributed growth in their cloud businesses to high demand for AI services, executives for the providers said during earnings calls Wednesday. Despite the rush in demand, Google’s parent company Alphabet reported weaker-than-expected revenue in its core business — search — as AI reshapes the company.
• Alphabet’s demand for AI services, in its infrastructure and model offerings, drove stronger cloud profitability and improved overall operating margins, but search grew just 12% from last year, executives said during the Q3 call.
• Microsoft reported 19% revenue growth in its Q1 2027 earnings call Wednesday, driven by growth in its Azure cloud infrastructure business, as it rapidly builds out data center infrastructure to meet AI demand.

Dive Insight:

Both companies’ growth trajectories show strong demand for AI, and their investments in AI infrastructure are laying the groundwork for deeper development of the technology throughout their businesses.

But proving...

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