With Microsoft Corp. (MSFT) and Alphabet Inc.’s (GOOG) Google chipping away at Amazon.com Inc.’s (AMZN) dominance in the cloud computing market, the second- and third-place players are in a race to create the smartest possible cloud offering by using advanced technologies, including artificial intelligence and machine learning.

Take Google: At the company’s annual developers' conference this spring, it unveiled the latest iteration of its tensor processing chips, which were developed for machine learning technologies and are making their way into the Google cloud, reported Forbes. The chips can provide more than 180 teraflops of processing power and, according to Forbes, are a dozen or more times more powerful than other chips on the market for cloud computing. It can also enable machine learning that will make it easier for customers to do all sorts of things on the cloud.

Meanwhile, Forbes reported that Microsoft already has 20 different intelligent services built into its Azure cloud offering such as image recognition and the ability to comprehend languages. It also recently launched Project Brainwave, which uses a series of chipsets to enable real-time AI in its data centers, noted Forbes. The idea behind Project Brainwave is to get machine learning applications to run more efficiently. (See also: Amazon Among First With Cloud Service AI.)

From Laggard to Leader?

The move on the part of the two companies comes as they are making inroads against Amazon Web Services (AWS) in the marketplace. In June, Pacific Crest Securities predicted Microsoft will surpass Amazon to become the leading cloud service provider, with it having more revenue from that business in the second quarter than its first-place rival. Analyst Brent Bracelin said Microsoft becoming the biggest cloud provider for the first time in 10 years would transition the company from a “cloud laggard to a cloud leader.” By incorporating more advanced technologies into the offering, both the Redmond, Wash., software giant and Google are hoping they can lure even more customers their way.

Still, Amazon doesn’t see itself as a laggard when it comes to AI in the cloud. In a recent interview with Barron’s, Matt Wood, general manager for deep learning and AI at AWS, said the company's cloud division has more machine learning running on its platform than any other company. (See also: What Is Amazon Web Services and Why Is It So Successful?)

While it is difficult to independently evaluate Wood's claim, it may not be entirely without substance. AI is a collection of technologies that enables machines to mimic human intelligence capabilities. However, machines require troves of data to learn from human actions. As the largest e-commerce​ player, Amazon already has massive amounts of data about its customers' habits and preferences. In addition, its AWS cloud division hosts data for clients from multiple different industries.


Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.