Google’s cloud division, which includes infrastructure and software subscriptions, reported a 35% year-over-year growth, reaching $11.35 billion in the third quarter. This represents a notable increase from the 29% growth rate recorded a year ago, making Google Cloud the fastest-growing player among its main competitors.
Amazon Web Services (AWS), which maintains its position as the market leader, grew by 19% to $27.45 billion—though still double the size of Google Cloud, its growth rate is considerably slower. Microsoft, the second-largest cloud provider, saw its revenue from Azure and other cloud services rise 33% year-over-year. This financial quarter, five of the six trillion-dollar tech companies reported results, with Nvidia being the exception. These nearly simultaneous reports from Amazon, Alphabet, and Microsoft provide investors with valuable insights into the shifting dynamics of the cloud market.
Alphabet’s Revenue Diversification Strategy
Traditionally reliant on digital advertising, Alphabet’s focus on expanding Google Cloud‘s footprint demonstrates its commitment to revenue diversification. Google Cloud turned profitable for the first time last year, and in Q3 2024, it posted a 17% operating margin. By comparison, AWS achieved a 38% operating margin—a figure analysts praised as impressive. Amazon also increased the service life of its servers from five to six years earlier this year, boosting its operating margin by two percentage points.
In addition, Microsoft has separated Azure from other products in its recent financial reports, highlighting the impact of AI services on its cloud division’s growth. Although Azure’s growth slowed slightly this quarter, Microsoft expects demand to rise in early 2025. Both Microsoft and Amazon face high demand that outpaces capacity, with Amazon deploying Nvidia accelerators and its proprietary Trainium 2, which has seen increased customer interest. Google, meanwhile, is developing its sixth generation of TPU accelerators, and Microsoft introduced its Maia chips last year, though these are currently used exclusively for internal services rather than customer rental, notes NIX Solutions.
Competition and Strategic Partnerships
Oracle, the fourth-largest cloud provider in the U.S., will release its quarterly report in December. In its previous report, Oracle noted a 45% increase in cloud infrastructure revenue, reaching $2.2 billion, up from 42% growth in the prior quarter. Oracle has also established partnerships with major cloud providers, allowing its databases to be hosted on their platforms—an initiative analysts see as a potential driver of growth for the company.
We’ll keep you updated as these cloud giants navigate the evolving landscape of demand, partnerships, and technological advancements.