MSFT vs. AMZN: Cloud in Focus with Recent Earnings
By: tokenist|2025/05/03 00:30:02
0
Share
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.Although AI models are yet to mature into consistent reliability, the trend is already clear. By inferring patterns from data, they can generate outputs at level and scale not seen in recorded history. This capacity spans content generation in all forms, as well as coding, image and language processing for the purpose of predictions and recommendations. In turn, AI’s capacity relies on cloud infrastructure via data centers. This translates to hyperscalers being the key intermediaries between AI models and humans. On Monday, we explored what this means for Alphabet (NASDAQ: GOOGL) as the company pours $75 billion into AI infrastructure this year alone. But where do Amazon.com (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) fit into this emerging AI landscape with their respective AWS and Azure cloud offerings?Indicative AMZN Stock DipOn Thursday, the e-commerce and logistics giant Amazon.com suffered a 5% stock sell-off following the Q1 2025 earnings report. This was short-lived, however, as many investors saw this as a buy-the-dip opportunity. Nonetheless, over the week, AMZN stock returned flatlined gains at 0.9% vs much more performant MSFT at 9.6% gains.The culprit was misaligned expectations. Namely, Amazon’s cloud division Amazon Web Services (AWS) reported 16.9% quarterly growth at $29.27 billion, under the expected analyst consensus of 17.4% at $30.9 billion revenue.Although a double-digit growth for such a wide moat company is still impressive, the performance matters in relative terms. A day earlier on Wednesday, Microsoft reported its Intelligent Cloud division grew quarterly by 20.8% at $26.75 billion, with Azure specifically gaining 33% growth.Microsoft’s Azure performance beat the Visible Alpha estimate of 29.7% at $26.13 billion. According to Microsoft’s CFO, Azure actually outperformed due to non-AI related services, while the AI boost, contributing 12 – 16%, was in line with expectations.Moreover, Microsoft boosted investor confidence with a stronger than expected outlook for its cloud services at 34% – 35% growth for fiscal Q4, which is calendar Q2.Join our Telegram group and never miss a breaking digital asset story.Investors Rightfully Shift Focus to AIOverall, Amazon beat earnings per share (EPS) estimate of $1.35 at $1.59, giving AMZN shareholders a 17.78% positive surprise for Q1. Microsoft’s EPS beatdown was more muted, beating estimated $3.2 at $3.46, giving MSFT shareholders a positive 8.13% surprise.Given that weekly AMZN vs MSFT stock performance is clearly on Microsoft’s side, at +0.9% vs +9.6% respectively, it is clear that investors approach Big Tech with a higher expectation bar. This is reflected in their forward price to earnings (P/E) ratios, with Microsoft at 28.41 and Amazon at 28.74, both of which are above the average P/E for the IT sector at 22.7.AI cloud support is now the focal point for these higher expectations. After all, Amazon CEO Andy Jassy told shareholders in February’s earnings call that AI is “a once-in-a-lifetime type of business opportunity”.So far, Amazon’s allotted capex into AWS for AI is worth $100 billion, above its peers Alphabet ($75B), Meta ($65B) and Microsoft ($80B) for fiscal 2025. A large part of that high investment comes from Amazon’s need to maintain its global cloud market share, at 30% vs Azure’s 21%.However, each company has its own strategic ecosystem integration approach that may benefit Microsoft in the long run.Competitive Advantage: Amazon vs Microsoft?Both Amazon and Microsoft employ usage-based billing for their cloud services. This spans across AWS’ SageMaker and Azure Machine Learning for training and inference workloads. Likewise, both companies bundle enterprise agreements for volume discounts alongside pre-pay reserved instances for compute capacity.All of this is bundled with ample storage, typically costing fractions of a cent per stored gigabyte. Yet, Microsoft has greater footing owing to its existing software ecosystem and tight relationship with OpenAI, creators of ChatGPT.So far, Amazon-backed Anthropic’s Claude 3.7 Sonnet is lagging severely behind, dominated by OpenAI’s o4-mini, Alphabet’s Gemini 2.5 Pro, and again OpenAI’s o3 model. Even China’s DeepSeek outperforms Claude at this point in time.And although Amazon’s Bedrock offers a multi-model approach with Anthropic (Claude), Stability AI, Meta (Llama) and its own Titan models, Azure’s AI Foundry (formerly Azure AI Studio) offers seamless, user-friendly and deep integration with Microsoft 365 and Dynamics 365.In other words, at this stage of AI development, AWS for AI is more suited for developers who switch between different foundation models to test AI waters. But as experimenting has its own associated costs, it is likely that enterprises will seek Azure’s road of least resistance.Lastly, branding will also play a role in cloud adoption. Microsoft is known worldwide as a legacy software specialist, while Amazon is known as a hybrid company serving many roles.Amazon vs Microsoft: Stock Price ForecastsYear-to-date, MSFT stock is up 4.4% while AMZN stock is down 14%. According to Wall Street Journal’s forecasting data, the average MSFT price target is $501.48 against its current price of $434.26 per share. This gives Microsoft shareholders a potential 15% upside.Amazon’s average stock price target is $244.84 against the current price of $190.20 per share. This gives Amazon shareholders a potential 28% upside, nearly double the gains from MSFT.In the end, both companies’ advantages are not going anywhere, so it is worth investing in both whenever stock markets experience major dips. With that said, at a market cap of $3.25 trillion, it will become increasingly more difficult to move Microsoft’s weight, which makes Amazon’s $2 trillion market cap more attractive.And although Microsoft’s bet on OpenAI appears to be the winning one, nobody knows for certain if that will be the case in a year’s time.Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.The post MSFT vs. AMZN: Cloud in Focus with Recent Earnings appeared first on Tokenist.
You may also like

Morning Report | Prediction market platforms like Kalshi and Polymarket jointly sue Kentucky over 14.25% trading tax; Bridgewater founder discusses decision-making in the AI era: principled thinking should run parallel to AI, human insight remains irre...
Overview of Important Market Events on June 15

What is the connection between Huang Zheng of Pinduoduo and blockchain?
From Pinduoduo's "reverse insurance" to blockchain's smart contracts, this article explains how Huang Zheng's underlying logic uses "certainty" rules to reshape the flow of wealth for ordinary people.

The other side of Musk's trillion-dollar fortune: 85% cannot be sold
SpaceX's IPO is a math problem, and the answer is not on the pricing day, but in the first quarter after the lock-up period ends.

The U.S. government prohibits foreigners from using Fable 5, Anthropic issues a rebuttal
The sudden removal of the two models has caused widespread shock in the tech industry and the AI community.

Citibank releases "2030 Asset Tokenization Market Outlook": 6 major trends may create a $8.2 trillion market
The tokenization of financial assets is moving from pilot projects to large-scale implementation, but this is a gradual evolution rather than a fierce revolution.

The trillion-dollar valuation test: Are the three major super IPOs a celebration for tech stocks or a nightmare for the crypto market?
Tech giants like SpaceX and OpenAI have sparked a $35 trillion super IPO wave. The "suction effect" is not enough to crash the stock and crypto markets, but the test of high valuations is just beginning.

Morning Report | Digital Asset completes $355 million financing led by a16z Crypto; Meta completes operational separation from Manus
Overview of Important Market Events on June 11

a16z Crypto Partner: Cash flow is the moat
Most companies spend years creating network effects on traditional infrastructure. Crypto founders inherit them as starting conditions.

Cryptocurrency market makers collectively seek change as it becomes increasingly difficult to make money
There is more and more to do.

How TradeXYZ, xStocks, and Alpaca break down the SpaceX IPO into three different strategies
The value of tokenized products ultimately depends on whether the underlying structure is sound, rather than just the price displayed on the interface.

$75 billion in risk asset redistribution: How will SpaceX's IPO affect U.S. stocks and Bitcoin?
The SpaceX IPO is short-term "capital competition" for the cryptocurrency market, while in the medium to long term, it leans towards "narrative endorsement" for Bitcoin.

Why Is BlackRock Investing $5 Billion in the SpaceX IPO?
What is driving the massive demand for the SpaceX IPO, and why did BlackRock place a $5 billion order? Learn how the historic listing could impact SpaceX stock, Bitcoin, SPCX, and crypto markets.

Morning News | CME Group launches Nasdaq Cryptocurrency Index futures; Asset management giant Janus Henderson strategically invests in Ethena
Overview of Important Market Events on June 10

Bitcoin Layer 2 Network Botanix: Why Did We Choose to Dissolve?
The Bitcoin L2 star project Botanix announced a gradual shutdown, with the team admitting to facing severe challenges from the failure of its business model and the prevailing trends. Users are urged to withdraw all assets before July 9, 2026.

Why did Oracle deliver the strongest financial report in history, yet its stock price fell?
Oracle's revenue for fiscal year 2026 set a record, with AI cloud orders soaring to $638 billion, but massive capital expenditures on computing power led to negative free cash flow, causing a 5% drop in after-hours stock prices.

When the P2P illicit funds from ten years ago turned into 60,000 bitcoins
The largest Bitcoin money laundering case in the UK has new developments: 16,000 Chinese victims are pursuing 61,000 seized Bitcoins across borders, and the dispute over the applicability of UK and Chinese laws will directly determine whether the victims can share in the soaring profits.

Dialogue with OmenX Founder: Why does the prediction market need an evolution from "spot" to "derivatives"?
How to reconstruct the prediction market using leverage?

Galaxy in-depth report: Is Solana still worth paying attention to?
Solana did not fall behind during the bear market. Trading enthusiasm has waned, but the network is more stable, RWA and stablecoins are expanding, and the capital foundation is much thicker than in the previous cycle. The real question is: when the speculative tide recedes, can perpetuals, predicti...
Morning Report | Prediction market platforms like Kalshi and Polymarket jointly sue Kentucky over 14.25% trading tax; Bridgewater founder discusses decision-making in the AI era: principled thinking should run parallel to AI, human insight remains irre...
Overview of Important Market Events on June 15
What is the connection between Huang Zheng of Pinduoduo and blockchain?
From Pinduoduo's "reverse insurance" to blockchain's smart contracts, this article explains how Huang Zheng's underlying logic uses "certainty" rules to reshape the flow of wealth for ordinary people.
The other side of Musk's trillion-dollar fortune: 85% cannot be sold
SpaceX's IPO is a math problem, and the answer is not on the pricing day, but in the first quarter after the lock-up period ends.
The U.S. government prohibits foreigners from using Fable 5, Anthropic issues a rebuttal
The sudden removal of the two models has caused widespread shock in the tech industry and the AI community.
Citibank releases "2030 Asset Tokenization Market Outlook": 6 major trends may create a $8.2 trillion market
The tokenization of financial assets is moving from pilot projects to large-scale implementation, but this is a gradual evolution rather than a fierce revolution.
The trillion-dollar valuation test: Are the three major super IPOs a celebration for tech stocks or a nightmare for the crypto market?
Tech giants like SpaceX and OpenAI have sparked a $35 trillion super IPO wave. The "suction effect" is not enough to crash the stock and crypto markets, but the test of high valuations is just beginning.
Customer Support:@weikecs
Business Cooperation:@weikecs
Quant Trading & MM:bd@weex.com
VIP Program:support@weex.com
