Amazon Web Services CEO Matt Garman speaks at the AWS re:Invent conference in Las Vegas on Dec. 4, 2024.
Noah Berger | Reuters
Amazon’s cloud group grew recorded revenue growth of 18% in the second quarter, slightly ahead of analysts’ estimates.
Amazon Web Services continues to lead the cloud infrastructure market, but is facing intensifying pressure from Microsoft and Google, as all three companies ramp up investments in artificial intelligence to take advantage of booming demand.
Microsoft and Google reported better-than-expected cloud results for the latest quarter, with higher growth rates than Amazon.
On Wednesday, Microsoft CEO Satya Nadella said revenue from Azure and other cloud services exceeded $75 billion in the fiscal year ending June 30, with growth in the quarter of 39%. It’s the first time Microsoft has provided a dollar figure for the business. Last week, Alphabet reported revenue of $13.62 billion for its cloud computing business, a 32% increase from a year ago.
AWS’ revenue for the second quarter totaled $30.87 billion, Amazon said on Thursday. Analysts polled by StreetAccount had expected $30.8 billion. AWS now represents 18% of Amazon’s revenue.
“We have a meaningfully larger business in the AWS segment than others,” Amazon CEO Andy Jassy told analysts on a conference call. “I think the second player is about 65% of the size of AWS.”
The cloud remains a profit center for Amazon. AWS generated $10.2 billion in second-quarter operating income, trailing the average analyst estimate of $10.9 billion, according to StreetAccount. Amazon’s total operating income was $19.2 billion.
During the quarter, AWS said it would open a data center region in Chile before 2027, and PepsiCo announced a multi-year agreement that involves moving workloads to the Amazon cloud.
Last week Microsoft issued patches to its SharePoint Server software after Chinese hackers exploited a vulnerability, gaining access to some clients’ internal files.
“For most companies they’re putting data that they really care about in the cloud,” Jassy said. “The security and the privacy of that data matters a lot, and there are very different results in security in AWS than you’ll see in other players.”
AWS continues to face supply shortages to meet rising AI demand, particularly when it comes to power, Jassy said. Microsoft expects to be constrained through the rest of the calendar year, finance chief Amy Hood said on Wednesday.
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