Led by AI investments, Cloud proves major revenue driver for big tech during recent earnings

The three major public cloud providers of the world – AWS, Microsoft, and Google have declared their revenues for the quarter ending December 31. Led by increased interest and investment in artificial intelligence, all the three providers have boosted growth.

AWS

AWS reported a 13% year-on-year sales increase to $24.2 billion, with operating income growing to $7.2 billion compared to  $5.2 billion in fourth quarter 2022. In terms of net sales, AWS segment was 14% of Amazon’s overall figure of approximately $170 billion. 

“AWS’s continued long-term focus on customers and feature delivery, coupled with new genAI capabilities like Bedrock, Q, and Trainium have resonated with customers and are starting to be reflected in our overall results,” Amazon’s chief executive officer Andy Jassy said.

For overall year 2023, AWS segment sales increased 13% year-over-year to $90.8 billion, while the operating income was $24.6 billion. To be sure, Amazon’s chief financial officer Brian Olsavsky said during the conference call that the company would increase its capital expenses for 2024 to support the growth of AWS including additional investments in generative AI and other language models. Amazon has already announced an investment of $4 billion in AI startup and Claude-maker Anthropic.

Microsoft Cloud

Microsoft’s cloud business drove the growth for the company.  Microsoft’s increased by 18% to  $62.0 billion. “Strong execution by our sales teams and partners drove Microsoft Cloud revenue to $33.7 billion, up 24% (up 22% in constant currency) year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

The intelligent cloud segment reported a revenue increase of 20% to $25.9 billion. To be sure, this segment includes Azure cloud infrastructure, SQL Server, Windows Server, Nuance, GitHub and enterprise services. Within intelligent cloud, the server products and cloud services revenue increased by 22%, while Azure and other service grew by 30%.

Microsoft, which has invested heavily in OpenAI, derived major gains from its AI investments. CEO Satya Nadella said on the conference call that the company now has  53,000 Azure AI customers, one-third of whom have been added in the past year. The number of customers willing to spend over $1billion on Azure has also increased, he added. 

Google Cloud

Google-parent reported a revenue of $86 billion, up 13% year over year for the quarter ending December 31. The Google Cloud business grew from $7.3 billion last year to $9.2 billion in this quarter. This cloud business revenue growth slightly tops Wall Street targets, as reported by Reuters. To be sure, Google’s cloud business turned profited for the first time in Q1FY23 with a  revenue of $7.4 billion.

“We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud. Each of these is already benefiting from our AI investments and innovation. As we enter the Gemini era, the best is yet to come,” said CEO Sundar Pichai.