Alphabet's cloud business, under Google's parent company, experienced a setback in the September quarter as Microsoft's cloud division thrived, signaling the success of Microsoft's AI investments. Although Alphabet exceeded Wall Street expectations for profit and sales, its shares dropped 7% in after-hours trading. Investors were eager to see Alphabet make strides in artificial intelligence and compete effectively with Microsoft's Azure and Amazon's AWS cloud services. Microsoft's robust AI initiatives, including its collaboration with OpenAI, have propelled it to the forefront in AI development. Both companies are vying for cloud market share with different approaches, impacting their performance.