The cause of Microsoft's Azure revival seen in the major partnership with Perplexity

Microsoft’s partnership with AI search startup Perplexity through a $750 million cloud contract is driven by a strong desire to regain its position in the market. Understanding why this partnership is happening now reveals the current state of the tech industry.

Causes Behind the Performance Decline

Microsoft’s stock has fallen sharply by 24% over the past six months. This decline is not just market fluctuation but stems from slowing growth in operating profits and a relative decline in competitiveness in the AI sector. As competition in the cloud market intensifies with Amazon Web Services (AWS) and Google Cloud, Azure’s growth has fallen short of expectations, directly impacting investor sentiment.

These harsh realities have compelled Microsoft to adopt a new strategic approach. It is no longer enough to deepen existing business lines; active collaboration with growth areas has become essential.

Cloud Partnership with Perplexity: The Meaning of the $750 Million Investment

The scale of this partnership demonstrates Microsoft’s seriousness. By deploying rapidly growing AI search companies like Perplexity on Azure’s infrastructure, both companies aim to create synergistic effects. Perplexity gains access to Microsoft’s cutting-edge cloud technology, while Microsoft strengthens its presence in the AI field.

Of particular note is that this partnership embodies Microsoft’s “AI First” strategy. In the current tech industry, ties to generative AI technology directly influence corporate valuation, and collaborating with an established AI startup like Perplexity sends an important market signal.

Could This Be a Turning Point in Market Valuation?

Industry analysts see this partnership with Perplexity as a key opportunity for the revival of Microsoft’s Azure business. Despite the stock’s sluggish performance, many experts remain optimistic. They believe Microsoft’s strategic positioning in the long-term growth trend of the AI industry is sufficiently valuable.

The future growth of Azure will significantly influence Microsoft’s competitiveness in the market. The partnership with Perplexity could serve as a catalyst for new growth phases, making it a development worth watching.