Microsoft outshines Amazon where it matters most
Microsoft and Amazon, two tech giants, reported their earnings last week, providing insight into the current state of the cloud and AI markets. Microsoft’s stock surged over 11%, driven by strong cloud and AI demand, while Amazon’s stock rose about 1%, buoyed by margin growth.
Microsoft’s Azure cloud revenue grew 33% year-over-year, with almost half of that growth attributed to AI workloads. CEO Satya Nadella and CFO Amy Hood emphasized that AI and non-AI workloads are becoming increasingly indistinguishable, particularly among digital-native customers. Microsoft’s $80 billion forecast for fiscal 2025 capital expenditures remains intact, with plans to expand further in 2026.
Amazon’s first-quarter results were strong, with revenue rising 9% to $155.7 billion and operating margins hitting a record 11.8%, largely due to AWS, its cloud business. AWS grew 17% year-over-year, but at a slower pace than Azure’s 33% growth. CEO Andy Jassy expressed confidence in AWS’s potential, describing it as a “multi-hundred-billion-dollar” opportunity over time.
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Analysts noted uncertainty around Amazon’s near-term earnings power and potential tariff impacts. AWS remains the largest cloud provider, but its growth rate is slower than Azure’s. Microsoft’s clear and confident vision for AI-driven revenue growth has positioned it as a leader in the enterprise AI market.
The enterprise AI market is expected to be a significant opportunity, with multiple winners likely to emerge. Both Microsoft and Amazon are well-positioned to capitalize on this trend, but Microsoft’s narrative clarity has given it an edge in the current market.