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Wall Street analysts who follow high-tech and cloud computing plunged out of champagne on July 30th.
Microsoft had reported stellar financial results and strong growth that could be associated with artificial intelligence. After the market closed, trading for extended hours rose Microsoft’s stock by up to 9%. The next day, Microsoft was temporarily valued at $4 trillion. (Then, like all good celebrations, Microsoft’s stock price fell almost 2%, so the rally went up more than 4% by noon Monday after taking a breather on Friday.)
In the case of Microsoft CEO Satya Nadella and Chief Financial Officer Amy Hood, almost every question started with a celebration of some sort on a call with an analyst.
“I’ve been covering Microsoft for a while, and I don’t think I’ve seen a quarter where everything is going so well,” said Keith Weiss, an analyst at Morgan Stanley, who asked the first question on a Microsoft Brass phone. “Congratulations on doing that.”
The mood then cooled Thursday when Amazon CEO Andy Jassie and Chief Financial Officer Brian Orsavsky answered questions from analysts.
Amazon Web Services, Amazon’s cloud computing arm, reported revenues that beat estimates, but Wall Street was overwhelmed by growth. The company’s stock price fell more than 8% on Friday and was 1% off on Monday.
“There’s a Wall Street Finance story right now that AWS is lagging behind (generative AI) with concerns about (market) stock loss,” Morgan Stanley analyst Brian Novac said over the phone. “Can you deal with that and what is your counterargument?”
Nowak also acknowledges that AWS is a large company and the world’s largest cloud computing provider, but asked if there’s any reason to assume that its growth will accelerate later in the year.
Following a question from JPMorgan analyst Doug Anmuth, he said “the cloud growth is significantly faster between the number two and three players in the space,” and asked if they believe Amazon is more due to customer demand or infrastructure supply.
Jassy defended the company’s cloud growth, saying that growth rate is a function of bases. This is difficult to show growth when starting with more numbers.
He said AWS is a “meaning business” than its competitors, with “the second player being about 65% of AWS.” Microsoft and Google are the second and third largest cloud providers.
Jassy didn’t name his competitors, but he jabed Amazon’s cloud peer with security. Microsoft’s security issues have repeatedly elicited criticism and government scrutiny, including violations that affected private companies and government agencies in July.
“For most businesses, they put data in the cloud that they really care about,” Jassy says. “The security and privacy of that data is very important, and AWS security has very different outcomes than what you would see from other players.”
While Amazon does not offer AWS-specific revenue and profit forecasts, Jassy said he is optimistic about the growth of the department as more companies are adopting AI technology. As AWS is the largest cloud provider, it is more likely that companies employing AI applications will do so in Amazon’s cloud.
“It’s still very fast with AI now,” he said.
Jassy’s answer did not calm the traders down. The company’s shares continued to slide through his comments, eventually falling more than 6% in trading outside business hours after Thursday’s trading.
AWS reported revenue of $30.8 billion from April to June, reflecting 18% year-over-year growth. However, their key peers, Microsoft and Google, reported 39% and 32% growth in the cloud sector.
Revenue growth is a huge focus for the cloud computing giant, with billions of people devoted to AI infrastructure and technology.
After spending more than $88 billion in capital expenditures over the past year, Microsoft is planning to spend another $30 billion by the end of September. Amazon expects to spend more than $100 million on this year’s investment between this year’s delivery expansion and AI infrastructure. Many of them are heading towards the latter.
Cloud growth is key to Microsoft under Nadella, which took over in 2014, but the company has historically obscured the results of its cloud division. Microsoft has collected revenue from its business with commercial products such as Microsoft 365 and LinkedIn Services.
On Wednesday, Microsoft’s eye-opening gamemanship ended. The company reported Azure revenue, indicating that the division brought in $75 billion a year, up 34% from the previous year. In comparison, AWS is projected to make more than $123 billion this year.
Microsoft’s revenue felt like a great moment for Navyure, both on Wall Street and in-house. After a call with Nadella analysts, he shared an internal message with his employees, reflecting 15 years in the cloud division.
“I still remember how it felt in the first place. We all believed in the arc of technology,” he said. “This is what we need to make long-term progress. We have a bold vision, perfect our ideas and continue our ups and downs.”
2025 Seattle Times. Distributed by Tribune Content Agency, LLC.
Quote: Why does Microsoft soar while Amazon sink? Retrieved from AI Growing Pains (2025, August 5) August 5, 2025 https://techxplore.com/news/2025-08-microsoft-soaring-amazon-ai-pains.html
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