AI Drives Major Gains for Big 3 Cloud Giants Amazon, Microsoft, Google

Artificial intelligence continues to be a dominating theme for the Big 3 cloud vendors.

Amazon, Microsoft, and Google all reported financial earnings this week, providing some guidance into the current state of cloud adoption and deployments. Google's parent company Alphabet reported earnings on Oct. 29, with Google Cloud revenue coming in at $11.35 billion for a 35% gain. Microsoft reported on Oct. 30, revealing that its Azure cloud infrastructure business revenue grew by 33%. Amazon rounded out the week, reporting on Oct. 31 a 19% year-over-year gain for its Amazon Web Services (AWS) cloud segment to $27.5 billion. 

"Over the last four quarters, the market has grown by almost $16 billion, while over the previous four quarters the respective figure was $10 billion," John Dinsdale, chief analyst at Synergy Research Group, wrote in a statement. "Given the already massive size of the market, we are seeing an impressive surge in growth."

Microsoft Azure Continues to Grow Share, Thanks to AI Services

Microsoft's Azure cloud business continues to grow for several reasons, including advancements in AI and ongoing cloud migration.

"Azure took share this quarter," Microsoft CEO Satya Nadella said during his company's earnings call. "We are seeing continued growth in cloud migration."

Related:AWS, Azure, and GCP: 4 Major Areas in Which They Differ

Nadella also emphasized the platform's growing adoption among enterprises. Azure Arc, the company's hybrid and multicloud offering, saw particularly strong growth, with customer numbers surging more than 80% year-over-year to reach over 39,000 customers across industries.

The company's cloud infrastructure footprint is also expanding.

"We now have data centers in over 60 regions around the world," Nadella said. "This quarter, we announced new cloud and AI infrastructure investments in Brazil, Italy, Mexico, and Sweden as we expand our capacity in line with our long-term demand signals."

In terms of performance improvements, Nadella said Microsoft Azure's new Cobalt 100 64-bit ARM processor-powered virtual machines (VMs) are being used by companies like Databricks, Elastic, Siemens, Snowflake, and Synopsys to power their general-purpose workloads at up to 50% better price/performance than previous generations.

The Azure OpenAI Service emerged as a particular bright spot, with usage more than doubling over the past six months. AI-based cloud services overall are helping Microsoft's cloud business.

"We offer the broadest selection of AI accelerators, including our first-party accelerator, Maia 100, as well as the latest GPUs from AMD and Nvidia," Nadella said. "In fact, we are the first cloud to bring up Nvidia's Blackwell system with GB200-powered AI servers."

Related:Microclouds: The Next Big Thing in Cloud Computing or Just Another Edge Strategy?

The 5 Pillars of Google Cloud's Success

During Alphabet's earnings call, CEO Sundar Pichai highlighted Google Cloud's momentum, particularly in AI adoption.

"Our technology leadership and AI portfolio are helping us attract new customers, win larger deals, and drive 30% deeper product adoption with existing customers," Pichai said.

According to Pichai, Google Cloud's success is focused around five strategic areas. First, its AI infrastructure demonstrated leading performance through advances in storage, compute, and software. Second, the enterprise AI platform, Vertex, showed remarkable growth, with Gemini API calls increasing nearly 14 times over a six-month period.

Third, the integration of AI with BigQuery, Google's data platform, led to significant customer wins. Pichai highlighted how Hiscox, a Lloyd's of London syndicate, reduced the time it took to quote complex risks from days to minutes. This combination of AI and data science contributed to an 80% growth in BigQuery ML operations over six months.

Fourth, cybersecurity solutions saw strong adoption, with Mandiant-powered threat detection increasing fourfold over six quarters. Notable customers including BBVA and Deloitte implemented these security solutions.

Finally, the quarter saw the launch of a new Customer Engagement Suite, with Volkswagen of America being among the early adopters, implementing the technology for its virtual assistant.

Amazon Sees Enterprise Modernization Efforts Growing

AWS is also growing on the strength of AI, but that's not the only reason.

"Companies are focused on new efforts again, spending energy on modernizing their infrastructure from on-premises to the cloud," Amazon CEO Andy Jassy said during his company's earnings call. "This modernization enables companies to save money, innovate more quickly, and get more productivity from their scarce engineering resources."

The company is making significant investments in AI infrastructure and capabilities.  AWS' custom silicon chips, Trainium and Inferentia, are gaining traction.

 "The second version of Trainium, Trainium2 is, starting to ramp up in the next few weeks and will be very compelling for customers on price/performance," Jassy explained.

The Amazon Bedrock service has expanded its model offerings, adding Anthropic's Claude 3.5 Sonnet, Meta's Llama 3.2, Mistral's Large 2, and multiple Stability AI models.

Looking ahead, AWS plans increased capital expenditure to support AI growth.

"It is a really unusually large, maybe once-in-a-lifetime type of opportunity," Jassy said about the potential of generative AI. "I think our customers, the business, and our shareholders will feel good about this long term that we're aggressively pursuing it."