Q4 Cloud Race: AWS, Azure, and GCP Comparison Q4 Cloud Race: AWS, Azure, and GCP Comparison

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By Ronald Tech

In a race to the top, cloud titans Amazon, Microsoft Corp., and Alphabet, Inc., all reported their fourth-quarter results. The focus of the spotlight was undoubtedly on their Cloud business, given the high-margin nature.

Cloud Market Dynamics: Amazon’s Amazon Web Services, or AWS, holds the lead in the cloud market, with Microsoft’s Azure public cloud and Alphabet’s Google Cloud Platform, or GCP, striving to catch up.

AWS Performance: In the fourth quarter, Amazon’s AWS reported revenue of $24.20 billion, reflecting a 13% year-over-year growth and a 5% sequential increase.

This year-over-year growth improved after a decline from 28% in the third quarter of 2022 to 12% in both the second and third quarters of 2023.

Operating profit from the segment rose a robust 38% to $7.17 billion, with an operating margin at 39%. The AWS business accounted for 14.24% of Amazon’s total revenue and 54.26% of its operating income, helping to offset the operating loss incurred by the company’s international e-commerce business.

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Azure Growth: Microsoft’s Intelligent Cloud business fetched revenue of $25.9 billion, marking a 20% year-over-year growth, and excluding the currency impact, a more modest 19% growth.

The company does not provide a dollar breakdown for the components of the Intelligent Cloud business. Despite this, it reported Azure’s 30% revenue growth, which accelerated from 29% in the fiscal first quarter.

“We now have 53,000 Azure AI customers. Over one-third are new to Azure over the past 12 months,” CEO Satya Nadella said on an earnings call. “Overall, we are seeing larger and more strategic Azure deals, with an increase in the number of billion-dollar-plus Azure commitments.”

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Six percentage points of Azure growth came from AI services, clarified CFO Amy Hood. The overall Microsoft Cloud revenue grew 24% to $33.7 billion, with the segment boasting a gross margin of 72%.

GCP Performance: Alphabet’s Cloud business reported revenue of $9.19 billion in the fourth quarter, up 25.66% from the $7.32 billion in the year-ago period. This year-over-year jump followed the third quarter’s 22.47% number.

Revenue from the GCP segment accounted for approximately 10.65% of Alphabet’s total revenue and generated an operating income of $864 million.

Although Amazon led in terms of absolute Cloud revenue dollars, Microsoft witnessed the fastest growth, followed closely by Google. Microsoft, with its lead in AI over the rest of the competition, may be poised for strong growth in the mid- to long-term.

Amazon ended Friday’s session up 7.87% at $171.81, Microsoft rose 1.84% to $411.22, and Alphabet gained 0.86% to $142.38.

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