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(Reuters) – Microsoft Corp shares surged 8% premarket on Wednesday and lifted tech stocks after the company’s robust earnings eased fears of a slowdown in cloud computing and boosted confidence that artificial intelligence will become a major growth driver.

The Redmond, Washington-based tech giant was set to add nearly $160 billion to its market value and replace Saudi Aramco as the world’s second-most valuable company, if premarket gains hold. Its $2.2 trillion valuation trails Apple Inc by about $400 billion.

At least 18 analysts raised their price targets on the stock, with Piper Sandler’s Brent Braceli saying “AI-All Star” Microsoft’s results floored investors, who had braced for a weak quarter, with better-than-expected growth across several units ranging from cloud computing to Office productivity software.

Microsoft’s results bode well for an industry that has laid off tens of thousands of workers recently as demand fades in the face of a sagging economy.

Shares of Big Tech peers Inc and Meta Platforms Inc rose, while those of Alphabet Inc, which is in a race with Microsoft for AI domination, fell 1.3%.

The parent company of Google had also reported better-than-expected quarterly results, but its search engine grew just 2% compared with the 10% increase for Microsoft’s Bing – which is benefiting from the integration of the tech behind ChatGPT.

The Windows maker’s earnings call on Wednesday underscored the growing importance of AI, with CEO Satya Nadella referring to 50 times in a 60-minute event.

Nadella said the company had over 2,500 Azure-OpenAI service customers ranging from Coursera and Mercedes-Benz to Snap Inc and that AI was integrated into a wide array of products.

“Given the significant head start OpenAI has over other generative AI engines and Microsoft has over its hyperscaler (large-scale data center) competitors, we believe that Azure may gain share as generative AI continues to proliferate into many more corners of software and the economy,” D A Davidson analyst Gil Luria said.

(Reporting by Nivedita Balu and Aditya Soni in Bengaluru; Editing by Subhranshu Sahu)