Microsoft's early venture into generative AI appears to be yielding significant returns. The tech giant reported a 13% revenue increase, reaching $56.5 billion during its recent earnings announcement. Following the news, Microsoft's stock price surged by 4%, contributing approximately $100 billion to its market value.

Much of this success can be attributed to Microsoft's forward-looking investments in AI, with CEO Satya Nadella emphasizing the company's commitment to "bringing the era of AI to life" for investors.

As Wedbush analyst Dan Ives observed, this marks a pivotal moment for Microsoft, allowing the company to control the narrative in the AI arena. Microsoft's substantial investment in OpenAI, particularly following the launch of ChatGPT, set off an AI competition among major tech players.

Both Microsoft and Alphabet, Google's parent company, reported robust third-quarter earnings on Tuesday. However, unlike Microsoft, Alphabet's stock price declined by 7%.

Microsoft's early adoption of ChatGPT and its collaboration with OpenAI triggered significant activity in the AI sector. In response, Google initiated its own chatbot project and pledged to accelerate the development of AI-driven products.

Microsoft's triumph is strongly linked to the success of Copilot, a productivity tool integrated into Microsoft apps like Office and Excel. According to Bola Rotibi, an analyst at CCS Insight, Microsoft effectively harnessed the momentum in generative AI with Copilot. The acquisition of GitHub also empowered Microsoft to expand AI within the developer community.

Despite Microsoft's current achievements, Rotibi stressed that it's too early to declare a victor in the AI race or suggest that Google is falling behind. She described it as a marathon and noted that while Microsoft has made significant strides, it's essential to monitor developments in the next two quarters to draw comprehensive conclusions.