Amazon and Microsoft are the dominant players in cloud computing, both experiencing strong growth and heavily investing in artificial intelligence (AI).

Amazon Web Services (AWS) leads the cloud market with nearly 30% share, and its revenue grew 17% last quarter, driven by AI offerings like Bedrock and SageMaker, as well as custom AI chips that lower costs.

Microsoft's Azure cloud platform has been a major growth driver, with a 33% revenue increase last quarter, fueled by AI services and early investments in OpenAI, though it faces capacity constraints.

Microsoft plans to increase capital spending in 2026, focusing more on GPUs and servers to address capacity issues and support its AI ambitions.

Microsoft relies heavily on AI models from OpenAI and Nvidia, but its relationship with OpenAI has become strained over negotiations involving intellectual property and profit-sharing, which could impact future growth.

Microsoft is also developing its own AI chips, although the next-generation Maia chip has been delayed, adding to the company's hardware investment efforts.

Amazon is leveraging AI to enhance its e-commerce operations through autonomous warehouse robots—over 1 million in use—and AI-driven logistics improvements for routing and delivery.

Additionally, Amazon uses AI internally to optimize marketing and support third-party sellers, with its digital advertising business becoming one of the largest globally.

While Amazon was not among the top 10 stocks recommended by Motley Fool Stock Advisor as of June 2025, its potential for high returns remains, similar to past successes like Nvidia and Netflix.

Despite both companies' strengths, Amazon's vertically integrated cloud platform and cost advantages from custom chips make it the preferred investment currently.