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

The large models in the United States are moving towards closure in the name of security
The government successfully inserted itself as an approver between commercial AI models and their users for the first time.

Morning Report | CoinEx becomes a key hub for Iran to evade sanctions, involving over $3.8 billion in funds; Kalshi seeks a new round of financing, with a valuation potentially rising to $40 billion
Overview of Important Market Events on June 25

From the white-haired stock god to the billionaire fund mogul, the smart people shorting Nvidia are all getting rich using the same framework
Give up on heavily investing in Nvidia's "nine major bottlenecks"! This article analyzes the underlying logic behind top AI investors making billions: physical infrastructure such as electricity, HBM, and optical interconnects are the true keys to wealth in AI hardware.

Why do cryptocurrency projects always like to change their names?
In many cases, the old names of encryption projects have no competitive advantage, only historical baggage.

Global Launch: As predictions become the most scarce asset in the AI era, Manadia is defining the next generation of the value internet
The trusted AI prediction ecosystem Manadia, which has secured $7 million in funding from well-known institutions like OKX, will globally launch in June. The core token UMXM has already been listed on multiple mainstream platforms, inviting you to seize the new blue ocean of the trillion-level predi...

Who is footing the bill for the $64 billion accounting frenzy?
Affected by Bitcoin falling below $60,000, publicly listed companies heavily invested in this asset are facing huge paper losses and valuation discounts, and their debt structure and accounting standards may trigger structural liquidity risks in the future.

I never expected that the first application of AI x Crypto would be in security auditing
AI has accelerated attack efficiency and also promoted the upgrade of defense systems. The security audit sector is undergoing a transition from a dividend model to a competitive model.

What is your view on Binance's competitive advantages?
When the dividends of rule arbitrage gradually approach zero, can we produce product strength, governance capability, and trust that are commensurate with its scale?

ETH has entered a non-consensus phase, and the turning point is approaching!
This has nothing to do with the Ethereum Foundation or Ethlabs; Ethereum needs to win by solving real problems.

The shift in the cloud of the air: from despising stablecoins a year ago to the high-profile entry of capital today
It can continue to question the cost-effectiveness of stablecoins in the G10 currency corridor, but it cannot ignore the structural opportunities of stablecoins in emerging markets, corporate finance, and on-chain settlements.

The survival dilemma of small and medium exchanges behind the withdrawal anomalies exposed by AscendEX
The living space is constantly being compressed.

Why Is Bitcoin Falling Below $60K? 5 Key Market Drivers Explained
Bitcoin has dropped sharply amid ETF outflows, Strategy stock weakness, AI stock rallies, and changing Fed expectations. Explore the key forces driving BTC’s latest correction and what traders should watch next.

Bitcoin vs. Gold in 2026: Which Asset Performs Better in Different Markets?
Bitcoin vs. gold in 2026: Why are both assets falling, and what does their changing correlation mean? Discover what drives Bitcoin and gold prices and how traders can navigate different market conditions.

Morning News | The draft amendment to the People's Bank of China Law aims to clarify the legal status of digital renminbi; South Korea will transfer about 40 unregistered virtual asset service providers to law enforcement agencies
Overview of Important Market Events on June 24

The cryptocurrency industry has entered the "Show Me" era: merely relying on vision is no longer enough
The awareness level of the audience in the cryptocurrency industry—including media, institutions, and retail investors—is steadily increasing, and this trend has become a foregone conclusion.

Interpreting the Ethereum Foundation's new structure: Reaffirming self-sovereignty amid institutional trends
The Ethereum Foundation has announced a new five-layer working framework, clarifying the focus of future development and reaffirming its commitment to decentralized core values amidst the wave of institutionalization.

Former SpaceX engineer reconstructs the financial execution system using first principles
Plan Execution Lab completes angel round financing for Singapore family office, with a valuation of 50 million USD.

Standard Chartered Bank sings a 50x rhapsody again, aiming for AAVE to reach 3500 USD
The throne of DeFi lending still exists, but the foundation beneath the throne needs to undergo a reconstruction or reinforcement.
The large models in the United States are moving towards closure in the name of security
The government successfully inserted itself as an approver between commercial AI models and their users for the first time.
Morning Report | CoinEx becomes a key hub for Iran to evade sanctions, involving over $3.8 billion in funds; Kalshi seeks a new round of financing, with a valuation potentially rising to $40 billion
Overview of Important Market Events on June 25
From the white-haired stock god to the billionaire fund mogul, the smart people shorting Nvidia are all getting rich using the same framework
Give up on heavily investing in Nvidia's "nine major bottlenecks"! This article analyzes the underlying logic behind top AI investors making billions: physical infrastructure such as electricity, HBM, and optical interconnects are the true keys to wealth in AI hardware.
Why do cryptocurrency projects always like to change their names?
In many cases, the old names of encryption projects have no competitive advantage, only historical baggage.
Global Launch: As predictions become the most scarce asset in the AI era, Manadia is defining the next generation of the value internet
The trusted AI prediction ecosystem Manadia, which has secured $7 million in funding from well-known institutions like OKX, will globally launch in June. The core token UMXM has already been listed on multiple mainstream platforms, inviting you to seize the new blue ocean of the trillion-level predi...
Who is footing the bill for the $64 billion accounting frenzy?
Affected by Bitcoin falling below $60,000, publicly listed companies heavily invested in this asset are facing huge paper losses and valuation discounts, and their debt structure and accounting standards may trigger structural liquidity risks in the future.
Customer Support:@weikecs
Business Cooperation:@weikecs
Quant Trading & MM:bd@weex.com
VIP Program:support@weex.com
