| Microsoft (MSFT) and Google parent Alphabet (GOOG, GOOGL) reported earnings after the bell Tuesday for what investors hoped would be an explosion of artificial intelligence power from both tech giants.
And while the two beat Wall Street's expectations on both their top and bottom lines, Microsoft came away the winner after reporting better-than-expected growth in its Azure business thanks to the strength of its AI offerings.
Google, on the flip side, reported slower-than-anticipated growth in its cloud business, despite pumping cash into its AI efforts.
It was a tale of two clouds for the rivals — Microsoft stock gained as much as 4% on Wednesday, while Google shares sank more than 9%.
"I think what this is telling us is, Microsoft is absolutely in a league of its own when it comes to enterprise software, when it comes to tech," RBC Capital Markets equity analyst Rishi Jaluria told Yahoo Finance Live on Wednesday.
"It's an unparalleled year for Microsoft. Who would have thought if we were … having this conversation a year ago and I were to tell you, 'Hey Microsoft is the leader in Big Tech AI, not Google,' you probably would have laughed at me and told me to get off of your show," Jaluria added.
Microsoft reported Azure growth of 29% in its first quarter, a marked reacceleration for the segment, which saw sequential growth fall in prior quarters, and above Wall Street's estimates of 27%.
Microsoft has been pouring money into its AI efforts, including a multibillion-dollar investment in ChatGPT developer OpenAI. And with AI permeating seemingly every aspect of Microsoft's enterprise and, increasingly, consumer offerings, those investments are beginning to bear fruit.
While Microsoft was taking a victory lap, Alphabet stock was reeling.
Despite its all-important ad business beating expectations, taking in $59.7 billion versus an anticipated $58.9 billion, Alphabet's Google Cloud business fell short of Wall Street's expectations. The segment brought in $8.41 billion in the quarter, while analysts were looking for $8.6 billion.
CEO Sundar Pichai talked up a slew of AI efforts underway at the company, but didn't provide nearly as many concrete numbers as Microsoft's Nadella.
Google's cloud business sits in third place behind market leaders Amazon and Microsoft, and AI is seen as a means of helping the segment grow at a faster clip. But, at least this quarter, that wasn't enough to keep Wall Street happy. | 
