Microsoft is ‘in the lead’ with new cloud-based A.I. workloads, CEO Nadella says
Microsoft CEO Satya Nadella speaks during a keynote address announcing ChatGPT integration for Bing at Microsoft in Redmond, Washington, Feb. 7, 2023.
Jason Redmond | AFP | Getty Images
Satya Nadella couldn’t help himself. He had something to brag about, and he did it on Microsoft’s painstakingly followed hourlong earnings call with analysts on Tuesday. Never mind that the stock was down about 4% after hours.
Nadella said that while Microsoft isn’t the largest provider of cloud infrastructure for other companies to use to run apps and websites (that would be Amazon, with an estimated 40% share compared to Microsoft’s 20.5%), the company is No. 1 when it comes to selling cloud-based AI services. That category is small but growing quickly after startup OpenAI’s ChatGPT chatbot, which is hosted on Azure, went viral at the end of 2022.
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A bigger artificial intelligence business might help Microsoft grow its position in cloud computing overall. On Tuesday, Microsoft said Azure and other cloud services increased by 26% year over year, faster than all other major product areas other than the Dynamics 365 cloud-based enterprise software.
Historically, Microsoft cares deeply about being dominant. For decades it has done that in PC operating systems with Windows and productivity software with Office. Since becoming CEO in 2014, Nadella has overseen a company that has continued to operate some laggards, including the Bing search engine, Surface PCs and Azure.
But in recent months Microsoft has been on a speed run to sell access to OpenAI’s underlying large language models in Azure to companies big and small, and some entrepreneurs have chosen to use them instead of models from Amazon, Google or startups.
Simultaneously, Microsoft is weaving the models into its own software, including Bing and Windows. Microsoft maintains a deep relationship with OpenAI after having invested billions into the startup.
What’s unclear is how much revenue Microsoft can accumulate from Azure AI services that depend on OpenAI’s technologies, and how much extra revenue that will bring in from companies using non-AI services in Azure. But Nadella sounded hopeful about Microsoft’s prospects in those areas.
“If you think about Azure, we have grown Azure over the years, coming from behind, and here we are as a strong No. 2 — in the lead when it comes to these new workloads,” he said. “So, for example, we are seeing new logos, customers who may have used another cloud for most of what they do are for the first time sort of starting to use Azure for some of their new AI workloads. We also have even customers who have used multiple clouds who used us for a class of sort of workloads also start new projects in data and AI, which they were using other clouds for.”
The concept of AI has been around longer than Microsoft, and Microsoft has been running AI models for other companies for several years. But ChatGPT and image-generation tools such as Adobe’s Firefly have kicked off fresh interest in generative AI, which involves taking a picture or other human input and creating new content with it.
Nadella told analysts to expect the company to win more market share and reduce the cost of acquiring customers.
“And so, yes, we celebrate,” he said.
That’s the reason Microsoft has disclosed how much of the expected Azure cloud growth will come from AI for the past two quarters, Nadella said.
Amy Hood, Microsoft’s finance chief, said on the call that in the fiscal first quarter, which will end on Sept. 30, Azure revenue should grow by 25% to 26% in constant currency, including 2 points from AI services. That could be worth hundreds of millions of dollars in new Azure AI revenue.
“There are two parts to even the AI,” Nadella said. “There is the models themselves, with our partnership with OpenAI. That’s sort of one type of spend on compute. And the other is much more revenue-driven, which is we will track the inference cost to the revenue and demand. And you’re already seeing both of those play out.”
WATCH: The question is how soon will we see A.I. hit Microsoft’s income statements: Adam Crisafulli
Elon Musk, chief executive officer of Tesla Inc., during a meeting between US President Donald Trump and Cyril Ramaphosa, South Africa’s president, not pictured, in the Oval Office of the White House in Washington, DC, US, on Wednesday, May 21, 2025.
Jim Lo Scalzo | Bloomberg | Getty Images
Tesla shares have dropped 7% from Friday’s closing price of $323.63 to the $300.71 close on Tuesday ahead of the company’s second-quarter deliveries report.
Wall Street analysts are expecting Tesla to report deliveries of around 387,000 — a 13% decline compared to deliveries of nearly 444,000 a year ago, according to a consensus compiled by FactSet. Prediction market Kalshi told CNBC on Tuesday that its traders forecast deliveries of around 364,000.
Shares in the electric vehicle maker had been rising after Tesla started a limited robotaxi service in Austin, Texas, in late June and CEO Elon Musk boasted of its first “driverless delivery” of a car to a customer there.
The stock price took a turn after Musk on Saturday reignited a feud with President Donald Trump over the One Big Beautiful Bill Act, the massive spending bill that the commander-in-chief endorsed. The bill is now heading for a final vote in the House.
That legislation would benefit higher-income households in the U.S. while slashing spending on programs such as Medicaid and food assistance.
Musk did not object to cuts to those specific programs. However, Musk on X said the bill would worsen the U.S. deficit and raise the debt ceiling. The bill includes tax cuts that would add around $3 trillion to the national debt over the next decade, according to an analysis by the Congressional Budget Office.
The Tesla CEO has also criticized aspects of the bill that would cut hundreds of billions of dollars in support for renewable energy development in the U.S. and phase out tax credits for electric vehicles.
Such changes could hurt Tesla as they are expected to lower EV sales by roughly 100,000 vehicles per year by 2035, according to think tank Energy Innovation.
The bill is also expected to reduce renewable energy development by more than 350 cumulative gigawatts in that same time period, according to Energy Innovation. That could pressure Tesla’s Energy division, which sells solar and battery energy storage systems to utilities and other clean energy project developers.
Trump told reporters at the White House on Tuesday that Musk was, “upset that he’s losing his EV mandate,” but that the tech CEO could “lose a lot more than that.” Trump was alluding to the subsidies, incentives and contracts that Musk’s many businesses have relied on.
SpaceX has received over $22 billion from work with the federal government since 2008, according to FedScout, which does federal spending and government contract research. That includes contracts from NASA, the U.S. Air Force and Space Force, among others.
Tesla has reported $11.8 billion in sales of “automotive regulatory credits,” or environmental credits, since 2015, according to an evaluation of the EV maker’s financial filings by Geoff Orazem, CEO of FedScout.
These incentives are largely derived from federal and state regulations in the U.S. that require automakers to sell some number of low-emission vehicles or buy credits from companies like Tesla, which often have an excess.
Regulatory credit sales go straight to Tesla’s bottom line. Credit revenue amounted to approximately 60% of Tesla’s net income in the second quarter of 2024.
WATCH: Threats to SpaceX & Tesla as Musk, Trump feud heats up
Amazon founder Jeff Bezos leaves Aman Venice hotel, on the second day of the wedding festivities of Bezos and journalist Lauren Sanchez, in Venice, Italy, June 27, 2025.
Yara Nardi | Reuters
Amazon founder Jeff Bezos unloaded more than 3.3 million shares of his company in a sale valued at roughly $736.7 million, according to a financial filing on Tuesday.
The stock sale is part of a previously arranged trading plan adopted by Bezos in March. Under that arrangement, Bezos plans to sell up to 25 million shares of Amazon over a period ending May 29, 2026.
Bezos, who stepped down as Amazon’s CEO in 2021 but remains chairman, has been selling stock in the company at a regular clip in recent years, though he’s still the largest individual shareholder. He adopted a similar trading plan in February 2024 to sell up to 50 million shares of Amazon stock through late January of this year.
Bezos previously said he’d sell about $1 billion in Amazon stock each year to fund his space exploration company, Blue Origin. He’s also donated shares to Day 1 Academies, his nonprofit that’s building a chain of Montessori-inspired preschools across several states.
The most recent stock sale comes after Bezos and Lauren Sanchez tied the knot last week in a lavish wedding in Venice. The star-studded celebration, which took place over three days and sparked protests from some local residents, was estimated to cost around $50 million.
Bezos is ranked third in Bloomberg’s Billionaires Index with a net worth of about $240 billion. He’s behind Tesla CEO Elon Musk at $363 billion and Meta CEO Mark Zuckerberg at $260 billion.
WATCH: Amazon CEO Jeff Bezos’ wedding sparks Venice protests
Google CEO Sundar Pichai addresses the crowd during Google’s annual I/O developers conference in Mountain View, California on May 20, 2025.
Camille Cohen | AFP | Getty Images
The Google Doodle is Alphabet’s most valuable piece of real estate, and on Tuesday, the company used that space to promote “AI Mode,” its latest AI search product.
Google’s Chrome browser landing pages and Google’s home page featured an animated image that, when clicked, leads users to AI Mode, the company’s latest search product. The doodle image also includes a share button.
The promotion of AI Mode on the Google Doodle comes as the tech company makes efforts to expose more users to its latest AI features amid pressure from artificial intelligence startups. That includes OpenAI which makes ChatGPT, Anthropic which makes Claude and Perplexity AI, which bills itself as an “AI-powered answer engine.”
Google’s “Doodle” Tuesday directed users to its search chatbot-like experience “AI Mode”
AI Mode is Google’s chatbot-like experience for complex user questions. The company began displaying AI Mode alongside its search results page in March.
“Search whatever’s on your mind and get AI-powered responses,” the product description reads when clicked from the home page.
AI Mode is powered by Google’s flagship AI model Gemini, and the tool has rolled out to more U.S. users since its launch. Users can ask AI Mode questions using text, voice or images. Google says AI Mode makes it easier to find answers to complex questions that might have previously required multiple searches.
In May, Google tested the AI Mode feature directly beneath the Google search bar, replacing the “I’m Feeling Lucky” widget — a place where Google rarely makes changes.
WATCH: Google buyouts highlight tech’s cost-cutting amid AI CapEx boom
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