Microsoft Scores in Cloud Competition

The trend towards hybrid working is spurring the cloud business of US tech companies. Now Microsoft has put a strong exclamation mark in the competition of cloud providers with Amazon and Google.

The US technology group Microsoft has made a successful start to its new fiscal year. In the first quarter (July to September), revenues in the cloud division shot up by 50 percent. This means that the strong growth rate of the cloud business continues, in the previous quarter Microsoft recorded an increase of 51 percent. According to industry experts, Microsoft boss Satya Nadella has recently been able to convince more users to switch to high-end versions of his cloud products and to pay more accordingly.

Analysts excited about Microsoft’s cloud businessMicrosoft CFO Amy Hood spoke of a “strong start” in the cloud business for Microsoft’s fiscal year, which began in July. She is not alone with this opinion, analysts emphasized the development of the cloud business in particular in their initial comments on Microsoft’s business figures. “This shows how Nadella can secure more and more market shares in this cloud arms race.” emphasized for example Dan Ives, stocks analyst at the US investment firm Wedbush, in an interview on Yahoo Finance. “That should drive the share further up.”

Dan Morgan of the asset manager Synovus Trust shares the same voices with Bloomberg, he also sees Microsoft Azure on the way to a higher market share . Only yesterday the “Financial Times” surprised with a report that British secret services are said to have hired AWS to process confidential material. The goal is to use artificial intelligence more intensively for espionage. However, AWS figures for the past quarter are not yet available, Amazon will not open its books until Thursday evening after the US market closes. Analysts expect the Amazon cloud division to have an average turnover of 15.5 billion dollars.

Microsoft on the way to number one? Can Microsoft, the previous number two in the cloud business, possibly replace AWS as the industry leader? The fact is: Microsoft posted revenues of 16.96 billion dollars for its “Intelligent Cloud” segment for the past quarter. There is also no sign of a flattening of the growth momentum: Microsoft is forecasting cloud revenues of for the current quarter 18.4 billion dollars – and is thus clearly above the analysts’ expectations of 17.9 billion dollars. However, these figures have to be limited insofar as Microsoft in its “Intelligent Cloud” segment not only the Azure division, but also other divisions such as GitHub, Visual Studio and Windows Server.

Google Cloud clearly below expectations In any case, with its strong balance sheet, Microsoft has once again demonstrated its willingness to fight in the competition of cloud providers – and once again relegated Google to its place, although the cloud unit from Google was able to operate under the aegis of Thomas Kurian secure a little more market share, but it is still miles behind Amazon Web Services (AWS) and Microsoft Azure. Nevertheless, Google boss Pichai believes that the division has “sustained momentum”, as he underlined on the analyst call. Google with record profit, YouTube disappointed The third group in the cloud ranking showed revenues for its Google Cloud division for the past quarter of just 4.99 billion dollars – and thus clearly missed the Wall Street consensus of 5.04 billion dollars. The revenue of the video portal YouTube also fell short of expectations with an increase of 44 percent to 7.2 billion dollars return. Thanks to a strong advertising business, Alphabet still posted its third record profit in a row, at $ 18.9 billion.

Strong Xbox and Office 365 business At Microsoft, in addition to the cloud, business involving Xbox consoles and “Office 365” products have proven to be strong growth drivers with a plus of 30 and 21 percent respectively. The bottom line was that the group as a whole posted a profit of $ 20.5 billion, but Microsoft is not only clearly ahead of Google in terms of cloud business and profit. With a current market capitalization of 2.33 trillion dollars, Microsoft is well ahead of Google parent Alphabet (1.86 trillion dollars) and can also move up further from Amazon (1.71 trillion dollars). Amazon shares lag behind Microsoft and However, if you only look back at this year, the Alphabet share on the stock exchange had the better run recently: it has soared by 59.6 percent since the beginning of the year, while Microsoft shares can boast a plus of 39.3 percent .

The Amazon share, on the other hand, with a price gain of 3.7 percent not only lagged behind the cloud competition, but also significantly behind the market as a whole. Investors and analysts alike will examine the numbers on Thursday evening more closely in search of clues as to whether the growth share still has potential in the long term.