Google, Microsoft and Amazon all report cloud beats in earnings

The top three cloud infrastructure providers all beat analyst estimates in earnings reports released late Wednesday, but Google The one that stood out was the one that achieved the fastest growth rate on record.

Google is after Amazon Web Services and Microsoft Azure in the booming public cloud market as demand for access to AI models and services increases. All three vendors provide a range of tools for companies to build and run their products, and also offer their own set of AI models and specialized hardware.

“Wow, that was a quarterly number,” Synergy Research analyst John Dinsdale said in an email after the results were announced. His firm estimated that cloud infrastructure spending reached $129 billion during this period.

“Our forecasts point to continued strong growth in the coming years as AI continues to drive usage, unlock new use cases, and drive cloud provider revenues,” Dinsdale said in Synergy’s update. he said.

Google Cloud’s revenue, which includes infrastructure and enterprise productivity applications, rose 63% to $20.03 billion, beating StreetAccount’s $18.05 billion forecast. This is by far the strongest growth rate at any time since Google began publishing cloud results in 2020.

In addition to offering a complete infrastructure suite for AI workloads, Google is competing tightly with OpenAI and Anthropic in the AI ​​models market due to Gemini’s continued adoption. The company is also seeing increasing growth from its self-developed tensor processing units (TPUs). Nvidia’s graphics processing units or GPUs.

“For the first time, our enterprise AI solutions have become our primary growth driver for the cloud,” Alphabet CEO Sundar Pichai said during the company’s webcast with analysts on Wednesday. he said. Pichai said revenue from products built with Google’s generative AI models increased by 800%.

Shares of Google parent company Alphabet rose 10% on Thursday, making April the stock’s best month since the internet search company went public in 2004. Amazon gained 0.8%. Microsoft fell about 4%.

AWS, which leads the cloud infrastructure market, increased its revenue by 28% to $37.6 billion. The consensus among analysts surveyed by StreetAccount was about $1 billion lower.

Amazon CEO Andy Jassy said on his company’s earnings call that AWS customer spending on its Bedrock service for building AI agents and applications increased 170% from the fourth quarter and consumed more tokens in the first quarter than in its history through 2023.

The results come a day after AWS said OpenAI models would be coming to Bedrock and that the new Bedrock service would allow customers to build advanced agents that integrate with their existing infrastructure.

“OpenAI said they are already seeing unprecedented demand for this new product, and we are seeing strong customer interest,” Jassy said.

Microsoft, the second largest cloud vendor, reported 40% growth in Azure and other cloud services; It beat StreetAccount and CNBC’s estimates of 39.3% and 38.8%, respectively. Management forecasts Azure growth in the second quarter to be 39% (40% in constant currency), above StreetAccount’s consensus of 37%.

Microsoft CEO Satya Nadella said in the call that the number of customers adopting Anthropic and OpenAI models through his company’s platform has doubled compared to the previous quarter.

The expansion will come at a hefty price for all three companies, as they have collectively told investors they expect to earn close to $600 billion in capital expenditures this year.

Competition is also emerging from smaller providers, called neocloud providers. This group, which includes companies such as CoreWeave And nebiusDinsdale said it has 5% of the cloud market.

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