AI drives Microsoft Azure towards AWS revenue levels

Microsoft Azure was able to record significantly more sales growth than its major competitor and market leader AWS. AI is the undeniable driver of this growth.

Microsoft Azure reported a thirty percent increase in revenue in the last quarter. AWS is still the market leader, but only grew by twelve percent. Microsoft rarely provides detailed figures for its cloud services, but analysts estimate that Azure now generates around a quarter less revenue than AWS. Five years ago, Microsoft’s cloud service was half the size.

AWS raised 24.2 billion euros in the last quarter: 11.7 percent more than a year earlier. Microsoft reports its cloud revenue in the broadest sense of the word and does not specifically communicate about Azure. The cloud industry grew by thirty percent and generated revenue of $25.9 billion. For example, Microsoft appeared to be bigger than AWS last quarter, but that’s a bit misleading. Finally, Microsoft also includes other cloud-related revenues in the figure, so these cannot be fully compared with those of AWS.

AI boost

It appears that AI efforts are giving Microsoft a big boost. The company was an early investor in OpenAI and Azure hardware is responsible for ChatGPT and the underlying GPT models. Its (generative) AI capabilities give Microsoft an advantage, while AWS finds itself in a new position: it has to run behind. Jeff Bezos’ cloud provider is doing its best to introduce more and more AI functionality, but Team OpenAI remains champion.

The question now is to what extent Microsoft and Azure can maintain this momentum. Azure’s growth shows that AWS’s market dominance may be challenged in the future.