Tech Titans: Microsoft and Alphabet in the AI Race

Microsoft and Alphabet are two of the biggest names in tech, and they're both making big moves in AI. Microsoft has been busy expanding its cloud services, especially in India. They're investing a whopping $17. 5 billion to build more data centers and boost their cloud capacity. This is part of their bigger plan to grow their AI infrastructure. Microsoft's cloud service, Azure, has been doing really well. In the first quarter of this year, Azure's revenue grew by 40%. And last year, Azure and other cloud services brought in $75 billion, which is a 34% increase from the year before. This shows just how important AI is for Microsoft's growth. But there's a catch. Microsoft is spending a lot of money to expand its AI capacity. This means their costs are going up, even though demand for their services is strong. Some investors are worried about this. Analysts are still bullish on Microsoft. Barclays analyst Raimo Lenschow recently reiterated his Overweight rating on Microsoft stock. He highlighted Microsoft's plan to raise prices for its Office and Microsoft 365 commercial plans. This shows that Microsoft has strong pricing power, thanks to steady enterprise demand and the rising use of its AI tools. Lenschow also noted that Microsoft has added over 1, 100 new features across its products over the past year. This justifies the higher prices. Currently, Wall Street has a Strong Buy consensus rating on Microsoft stock. The average price target of $632. 22 implies a 28% upside potential. Alphabet, on the other hand, has seen a sharp rise in investor interest. Their stock has gained 68% so far this year. This is partly due to the launch of their new AI model, Gemini 3, and their new Ironwood TPUs. These developments have positioned Google as a key supplier of AI infrastructure. Alphabet's cloud business is also benefiting from the broader AI shift. They recently crossed $100 billion in quarterly revenue for the first time. Their Google Cloud ended the quarter with a $155 billion backlog, reflecting persistent demand for their AI-focused services and enterprise tools. But some analysts are cautious about Alphabet's valuation. They note that expectations for Alphabet have moved up quickly, and the stock may need sustained cloud and AI growth to support its current levels. Truist analyst Youssef Squali recently raised his price target on Alphabet stock to $350 from $320. He cited improving trends in digital advertising and expects U. S. e-commerce and digital ad spending to reach record levels this holiday season. Squali also made a modest upward adjustment to his outlook for Alphabet's Other Bets unit, pointing to Waymo's faster rollout across more U. S. cities. Overall, Wall Street has a Strong Buy consensus rating on Alphabet stock. The average price target of $320. 15 indicates a modest upside potential of around 1%.