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 AI gamble of mining companies: Valuations enter a phase of differentiation, and it's hard to turn the tide
This gamble of transforming into AI is testing the financial strength and execution capability of mining companies.

A letter from Alliance to entrepreneurs: Written on the occasion of Cursor selling for 60 billion dollars
Great companies are forged before they become obvious.

Will MicroStrategy fall into a death spiral? What will the macro trend be in the second half of the year?
The cryptocurrency industry may gradually shift from the hype of native altcoins to real asset tokenization, on-chain machine economy, and a more mature industrialization phase.

Blockchain Capital Partner: The Core Secret of Arbitrage
On cold starts, breaking the circle, and the toughest hurdle for founders to overcome.

STRC unanchored by 11%, can the perpetual motion machine of Strategy still operate?
Beyond the leverage crunch, what is even more concerning is the liquidity reserves of the Strategy.

Bitcoin Market Analysis 2026: Can BTC Reach $150K by Year-End?
Bitcoin price prediction 2026: Can BTC hit $150,000 by year-end? Explore Fed policy, Kevin Warsh's stance, Bitcoin ETF flows, exchange data, and BTC market forecasts.

Bitcoin ETF Outflows Hit a Record $4.4 Billion: What Are Traders Doing With Their Cash?
Bitcoin ETFs lost $4.4 billion over 13 trading days, raising questions about market sentiment and Bitcoin's bottom. Here's what Standard Chartered is watching and how traders are managing idle stablecoin balances during uncertain markets.

WEEX App Just Got Smarter – New Tabs for Faster Trades & Easy Asset Management
Discover WEEX App’s new trading tabs: Futures, TradFi, Copy Trade (users)/ Elite Trade (lead traders) on the same page. Solve messy navigation, find opportunities faster, and manage all trades in one place.

WEEX All-New Search Features: Find, Trade & Earn Faster Than Ever
Supercharged search is here! Discover WEEX’s upgraded Search features with hot events, new listings, live market sentiment, and one-click trading. Trade smarter, seize every opportunity.

Morning Report | Illinois signs the strictest digital asset tax law in the U.S.; RWA tokenization market size surpasses $43 billion, institutions accelerate the migration of on-chain assets
Overview of Important Market Events on June 17

Full version of the debut Q&A! Federal Reserve Chairman Waller: Sticking to the 2% inflation target, establishing five special working groups, individual did not submit the dot plot
Federal Reserve Chairman Waller's debut featured a significant slimming statement, the cancellation of forward guidance, refusal to submit the dot plot, and the establishment of five working groups, vowing to uphold the 2% inflation target, which triggered a sharp decline in U.S. stocks and a surge ...

From Disruptor to Shadow Market: The Crypto Market is Becoming a Colony of Traditional Finance
"Coin-stock linkage" has evolved from the early stage of macro correlation and one-way penetration of emotional funds to the current 3.0 stage, where on-chain perpetual contracts provide extended trading hours and emotional signal value for traditional assets 24/7, and participate in Pre-IPO pricing...

Dalio's important long article: How to position in the current market environment?
Do not confuse the excitement for new technologies with whether those tech stocks are attractive.

OKX Star analyzes Binance's competitive advantages: when regulation levels the playing field, competition has just begun
OKX founder Star published a lengthy article, systematically analyzing Binance's competitive advantages over the years: regulatory arbitrage, speculative narrative cycles, social media control, and superficial compliance, stating that the essence of these advantages is not product capability, but ra...

New gameplay for participating in initial offerings on cryptocurrency exchanges
In this competition for cutting-edge assets, what has always been truly scarce is not the technology, but the underlying equity itself.

Why Is Bitcoin Down Today? What the Hawkish FOMC Means for SpaceX, Gold and Nasdaq
Why is Bitcoin down today? A hawkish FOMC pressured crypto and gold, while SpaceX surged to a $2.5 trillion valuation and Nasdaq gained attention. Here's what happened and why traders are looking beyond Bitcoin.

DeepSeek Financing Story
DeepSeek's financing insider information exposed: "Four-hour meeting" fully demonstrates Liang Wenfeng's determination for AGI, over a hundred institutions involved, Sequoia and Hillhouse rarely absent, not poaching talent is the hardest red line.

Morning Report | DeepSeek completes over $7 billion in financing, with a valuation exceeding $50 billion; Musk's personal wealth has surpassed the total market value of Bitcoin
Overview of Important Market Events on June 16
The AI gamble of mining companies: Valuations enter a phase of differentiation, and it's hard to turn the tide
This gamble of transforming into AI is testing the financial strength and execution capability of mining companies.
A letter from Alliance to entrepreneurs: Written on the occasion of Cursor selling for 60 billion dollars
Great companies are forged before they become obvious.
Will MicroStrategy fall into a death spiral? What will the macro trend be in the second half of the year?
The cryptocurrency industry may gradually shift from the hype of native altcoins to real asset tokenization, on-chain machine economy, and a more mature industrialization phase.
Blockchain Capital Partner: The Core Secret of Arbitrage
On cold starts, breaking the circle, and the toughest hurdle for founders to overcome.
STRC unanchored by 11%, can the perpetual motion machine of Strategy still operate?
Beyond the leverage crunch, what is even more concerning is the liquidity reserves of the Strategy.
Bitcoin Market Analysis 2026: Can BTC Reach $150K by Year-End?
Bitcoin price prediction 2026: Can BTC hit $150,000 by year-end? Explore Fed policy, Kevin Warsh's stance, Bitcoin ETF flows, exchange data, and BTC market forecasts.
Customer Support:@weikecs
Business Cooperation:@weikecs
Quant Trading & MM:bd@weex.com
VIP Program:support@weex.com
