Microsoft Azure Outperforms AWS and Google Cloud in the cloud space

In the latest quarter, Microsoft Azure’s Intelligent Cloud revenue, which includes the company’s server products and cloud services, increased 19% year over year to $28.5 billion in the most recent quarter. Currently, this industry accounts for around 45% of Microsoft's overall income. AWS, meanwhile, revealed $26.28 billion in revenue, a 19% rise. In contrast, Google Cloud had a 29% increase in sales, totalling $10.3 billion.

Combined, AWS, Google Cloud and Microsoft Azure accounted for a whopping 67 per cent share of the $76 billion global cloud services market in Q1 2024, according to new data from IT market research firm Synergy. It needs to be seen, however, if Microsoft Azure has increased its market share.

One thing common amongst the three hyperscalers is that they have kept their trust in generative AI even though it hasn’t really started to pay off. Microsoft announced plans to spend more money this fiscal year to enhance its AI infrastructure, even as growth in its cloud business has slowed, suggesting that the AI payoff will take longer than expected.

Microsoft CFO Amy Hood explained that this spending is essential to meet the demand for AI services, adding that the company is investing in assets that “will be monetised over 15 years and beyond.” Meanwhile, CEO Satya Nadella said that Azure AI now boasts over 60,000 customers, marking a nearly 60% increase year-on-year, with the average spending per customer also on the rise.

“For the next quarter, we expect Azure’s Q1 revenue growth to be 28% to 29% in constant currency,” said Hood. “Growth will continue to be driven by our consumption business, including AI, which is growing faster than total Azure.”

On similar lines, Google is facing increasing AI infrastructure costs. “The risk of under-investing far outweighs the risk of over-investing for us. Not investing to stay ahead in AI carries much more significant risks,” warned Google CEO Sundar Pichai.