(Reuters) - Microsoft ( MSFT ) shares fell 2% before the bell on Wednesday as growth in the tech giant's cloud business slowed, while Nvidia ( NVDA ) and other chipmakers rallied following a bright quarterly report from Advanced Micro Devices ( AMD ).

The gains in chipmakers and losses in their biggest customers underscored a divide in the AI landscape, with investors questioning if Wall Street's AI rally may have become overextended.

Microsoft ( MSFT ) is on track to shed more than $70 billion in its market capitalization, if losses hold.

"Microsoft ( MSFT ) reported some deceleration in its core cloud business, but a huge increase in capex. That represents a transfer of wealth from Microsoft ( MSFT ) shareholders to Nvidia ( NVDA ) shareholders," said Gil Luria, senior software analyst at D.A. Davidson.

In its report after the bell, Microsoft ( MSFT ) said revenue from its Intelligent Cloud unit - home to the Azure cloud-computing platform - jumped 19% to $28.5 billion, but missed analysts' estimates of $28.7 billion.

"Since Microsoft ( MSFT ) makes up approximately 20% of demand for Nvidia's ( NVDA ) highest quality AI chips, increasing capex spend at Microsoft ( MSFT ) is good news for Nvidia's ( NVDA ) bottom line," said Kathleen Brooks, research director at XTB.

"Since Nvidia ( NVDA ) remains the leading hardware producer for AI technology, increasing capex spend by its biggest customers bodes well for Nvidia's ( NVDA ) results."

Its capital expenditure, including finance leases, jumped 78% in the quarter to $19 billion, with Microsoft ( MSFT ) saying it needs to expand its global network of data centers and overcome capacity constraints to meet AI demand.

Big Tech companies - Meta Platforms Amazon Apple, Alphabet and Tesla - were marginally up in premarket trading, after having fallen on Tuesday following Microsoft's ( MSFT ) results.

Investors are impatient to see more results from massive investments in AI, said Daniel Morgan, senior portfolio manager at Synovus Trust.

"That's what messing up the whole thing. The stocks traded way up in anticipation of these reports," Morgan said.

The growing cost of the AI race added to investor fears after Alphabet last week reported a bigger-than-expected rise in capital expenditure to support its generative AI technology.

Technology companies have faced high expectations going into this earnings season. Analysts on average see technology companies in the S&P 500 growing their aggregated earnings by almost 10%, according to LSEG data.

AMD surged more than 9% in premarket trading after it forecast third-quarter revenue above market estimates, banking on demand for its AI chips staying strong.

Shares of Nvidia ( NVDA ), whose processors are the gold standard in AI computing, rose 5.6%. Broadcom ( AVGO ), which also sells AI-related chips advanced 4.4%. Intel ( INTC ) added 1.86% and Qualcomm ( QCOM ) rose 3.5%.

"We're still in a tough macro environment. AI is absolutely real, but requires a lot of investment and that is visible in the capex numbers," said Rishi Jaluria, an analyst at RBC Capital Markets.

(Reporting by Noel Randewich in San Francisco; Additional reporting by Anna Tong in San Francisco and Aditya Soni, Yuvraj Malik and Kanchana Chakravarty in Bengaluru; Editing by David Gregorio and Arun Koyyur)