Cloud Titans AMazon, Inc. AMZN, Microsoft Corp. MSFT AND Alphabet, Inc. GOOGLE GOOG all reported fourth-quarter results this week, and the spotlight was on cloud businesses, given their high-margin nature.
The Q4 Cloud Race: Amazon Web Services by Amazon, or AWSis the leader in the cloud market, together with Microsoft Sky blue public cloud and Alphabet’s Google Cloud Platform, or GCPplaying catch up.
AWS: In the fourth quarter, Amazon’s AWS reported revenue of $24.20 billion, marking 13% year-over-year growth and a 5% sequential increase.
Year-over-year growth picked up after falling from 28% in the third quarter of 2022 to 12% in both the second and third quarters of 2023.
The segment’s operating profit increased 38% to $7.17 billion, with an operating margin of 39%. The AWS business accounted for 14.24% of Amazon’s total revenue and 54.26% of its operating income, helping to mitigate the operating loss suffered by the company’s international e-commerce business.
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Sky blue: Microsoft’s December quarter is the second quarter of its fiscal year. The intelligent cloud business generated revenue of $25.9 billion on total company revenue of $62 billion. This marked growth of 20% year-over-year, and excluding the currency impact, growth was a more modest 19%.
The intelligent cloud business includes server products and cloud services, as well as enterprise and product services. Company revenues were driven by Azure’s 30% revenue growth. That growth accelerated from 29% in the fiscal first quarter.
The company does not provide a dollar breakdown for components of the Intelligent Cloud business.
“We now have 53,000 Azure AI customers. Over a third have joined Azure for the first time in the last 12 months,” the CEO said Satya Nadella he said on an earnings call. “Overall, we are seeing larger and more strategic Azure deals, with an increase in the number of Azure commitments in excess of billions of dollars.”
CFO Amy Hood clarified that six percentage points of Azure’s growth came from AI services.
Overall, Microsoft Cloud revenue grew 24% to $33.7 billion, and the segment had a gross margin of 72%.
PCG: Alphabet’s Cloud business brought the company $9.19 billion in revenue in the fourth quarter, up 25.66% from the $7.32 billion reported in the same period a year ago. Year-over-year growth jumped from 22.47% in the third quarter.
Revenue from the GCP segment represents approximately 10.65% of Alphabet’s total revenue. It generated operating profit of $864 million.
While Amazon leads in terms of absolute cloud revenue, Microsoft has seen the fastest growth, followed by Google. Microsoft, with its leadership in artificial intelligence compared to the rest of the two companies, could see strong growth in the medium to long term.
Amazon closed Friday’s session up 7.87% at $171.81, Microsoft rose 1.84% to $411.22 and Alphabet gained 0.86% to $142.38, according to Benzinga Pro data.
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