The cloud battles are heating up.
Wall Street awaits quarterly results from Amazon (AMZN) after Thursday’s closing bell. Its high-growth cloud business, Amazon Web Services (AWS), has been facing stiff competition from Microsoft’s (MSFT) Azure division.
Revenue growth for AWS released in Thursday’s earnings report will likely further cement a thesis that has been in place for several quarters: Azure is growing faster than AWS.
AWS revenue still grew at an impressive 41% year-over-year for first quarter to roughly $7.7 billion. Credit Suisse analysts expect 40% revenue growth for AWS in the second quarter to roughly $8.6 billion, which significantly trails the 64% quarterly growth seen in Azure. In absolute terms, Microsoft doesn't break out the revenue of its Azure division.
That 40% estimate also trails the 49% revenue growth AWS clocked in the second quarter of 2018.
In fact, for the past two years, according to Credit Suisse data, quarterly revenue growth for AWS has stood in the 40%-49% range. In 2017 and 2018, Azure posted numerous back-to-back quarters of revenue growth north of 90% year-over-year.
Still, on Wednesday, Credit Suisse raised their price target on Amazon shares to $2,250 from $2,200.
From a stock point of view, investors seem to think there is room for both cloud giants. Amazon and Microsoft shares are both up more than 30% so far this year. While Microsoft holds the title of the world’s most valuable company, with a market cap above $1 trillion, Amazon is a close second, with a $980 billion valuation.
EDITOR’S NOTE: This story has been updated to reflect how Microsoft reports its Azure financial results.
Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.
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