Microsoft marches into new quarter with cloud business worries

Microsoft, one of the biggest players in the AI boom, has recently faced challenges that have left investors questioning Redmond’s growth prospects, especially as DeepSeek’s overnight sensation shook the US tech market.

Over the past year, Microsoft’s stock has seen a modest increase of less than 8%, lagging behind its tech peers, including Tesla, Alphabet, and Apple. The primary concern for investors is Microsoft’s cloud business, Azure, which has shown little growth in recent quarters despite its strong dominance.

Meta Platforms, on the other hand, saw its stock hit a record high, while Microsoft struggled due to worries about its AI investments, particularly its stake in OpenAI. That, was after over $1 trillion lost from the US market from DeepSeek’s arrival in the AI boom.

To put matters worse, last week, Microsoft said that it’s no longer the exclusive cloud provider for OpenAI, and this shift comes as part of the $500 billion Stargate Project, a joint venture between OpenAI, Oracle, and SoftBank.

Microsoft is set to announce its quarterly earnings report on Wednesday.

The situation has become even more complicated as the UK’s Competition and Markets Authority (CMA) raised concerns about Amazon Web Services (AWS) and Microsoft’s Azure cloud services. Together, the two companies account for up to 40% of the UK’s cloud market.

And now, the CMA is conducting an inquiry into potential anti-competitive practices in the cloud sector, which is valued at £9 billion. The investigation is focused on issues such as high data transfer fees, licensing costs, and vendor lock-in, which may limit businesses’ options and stifle competition.

Both AWS and Microsoft have now defended their practices.