The giants of cloud computing, Amazon.com, Inc. AMZN, Microsoft Corp. MSFT, and Alphabet, Inc. GOOGL GOOG all recently posted their fourth-quarter results. With the spotlight squarely on their cloud businesses, given their high-margin nature, the race was on to see who emerged as the victor.
Q4 Cloud Performance: In the fourth quarter, Amazon’s AWS reported revenue of $24.20 billion, marking a 13% year-over-year growth and a 5% sequential increase. This uptick came after a period of fluctuating performance, hinting at the ebbs and flows in the cloud market.
Operating profit from the segment surged 38% to $7.17 billion, with a robust operating margin at 39%. AWS contributed significantly to Amazon’s revenue and played a vital role in mitigating the operating loss from the company’s international e-commerce business.
The Azure Ascent: In the same quarter, Microsoft’s Intelligent Cloud business brought in revenue of $25.9 billion, marking a 20% year-over-year growth. The star performer within this segment was Azure, with a stellar 30% revenue growth, signifying Microsoft’s strong position in the cloud space.
Microsoft’s Azure business expansion was driven by not just existing clients but also new customers, reflected in a remarkable 53,000 Azure AI customers. The talk of larger and more strategic deals signifies Azure gearing up for a promising future, with CEO Satya Nadella highlighting the increasing number of billion-dollar-plus Azure commitments.
CFO Amy Hood added that Azure’s growth was boosted by six percentage points attributed to AI services. Overall, Microsoft Cloud revenue grew 24% to $33.7 billion, boasting a gross margin of 72%, underlining Microsoft’s formidable cloud business.
Google Cloud’s Gain: Alphabet’s Cloud division raked in $9.19 billion in revenue in the fourth quarter, a remarkable 25.66% increase from the year-ago period. The meteoric rise in year-over-year growth heralded a turning point for Google Cloud Platform (GCP).
This revenue accounted for approximately 10.65% of Alphabet’s total revenue, with an operating income of $864 million. Amazon led in absolute cloud revenue, but Microsoft exhibited the fastest growth, closely trailed by Google. With its lead in AI, Microsoft seems poised for substantial growth in the medium to long term.
On market close Friday, Amazon was up 7.87% at $171.81, Microsoft surged 1.84% to $411.22, and Alphabet gained 0.86% to $142.38, based on Benzinga Pro data.
