AI Is Almost the Easy Part. Everything Else Is Hard

Good morning. Each round of tech earnings makes one thing more clear: Serving artificial intelligence may be the easy part. Sure, it’s expensive, but the demand is there, even if capacity isn’t.

Everything else around AI isn’t so easily solved: how companies make money, how they’re organized and how many people they need when AI changes the work. A company can buy more capacity. It can’t just buy its way out of business model and operating model disruption.

This week’s earnings from Microsoft and Google show that even the companies selling AI aren’t immune.

Start with what’s working: The cloud businesses at both companies—increasingly AI businesses—are growing at rates rarely seen at this scale. Google’s cloud business grew 103% year over year, driven by demand for AI infrastructure and services and helping parent company Alphabet report 25% revenue growth for the quarter. Microsoft’s Azure grew 48%, and lifting total revenue to $92.28 billion, up 19%, for its fiscal first quarter.