Artificial intelligence (AI) startup Perplexity AI has signed a $750 million cloud deal with Microsoft (MSFT), sparking rumors it’s ditching long-time partner Amazon Web Services (AMZN). A Perplexity spokesperson said the agreement provides access to “frontier models from X, OpenAI and Anthropic,” through Microsoft’s Foundry service, which offers leading AI models.
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The three-year deal with Microsoft Azure lets Perplexity deploy a broad array of AI models. Microsoft has long promoted Foundry as the premier platform for AI deployment, bolstered by partnerships with top vendors, and the Perplexity deal further cements its dominance.
AWS Remains Perplexity’s Primary Provider
The spokesperson told Bloomberg that AWS remains its “preferred cloud infrastructure provider” with more partnerships to be announced soon. Perplexity ranks among the most valuable AI startups, but it faces tough competition from Alphabet’s (GOOGL) Google and OpenAI in disrupting online search. Perplexity has raised less capital, unlike heavily funded rivals OpenAI and Anthropic, which have recently secured massive infrastructure deals.
The company built its foundation on an early AWS alliance and relies on it heavily. It uses Amazon’s Bedrock service to run Anthropic AI models in its search engine. CEO Aravind Srinivas often speaks at AWS events; in 2023, he stated that the company is “all-in” on Amazon’s cloud. In return, AWS highlights Perplexity as a top AI customer using its tech.
Yet relations have soured between the two lately. In November, Amazon sued Perplexity to block its AI tools from helping users shop and buy on Amazon’s marketplace. Perplexity called Amazon a bully and said the lawsuit hurts user choice, with Srinivas highlighting their “hundreds of millions” committed to AWS.
Why Is Microsoft Stock Crashing?
MSFT shares plunged nearly 10% on January 29 after reporting slower cloud growth in Q2FY26 and softer margin guidance, disappointing investors. Moreover, several Wall Street analysts slashed their price targets on MSFT, blaming tepid Azure performance.
On TipRanks, Microsoft has a Strong Buy consensus rating based on 33 Buys and one Hold rating. The average Microsoft price target of $603.95 implies 39.3% upside potential from current levels. Over the past year, MSFT stock has gained 4.5%.
