Recent earnings reports from major U.S. tech companies have highlighted Microsoft (MSFT, Financial) Azure's superior performance compared to Amazon (AMZN) AWS and Alphabet (GOOGL) Google Cloud. Wall Street analysts have explored Azure's impressive growth. According to Jefferies analyst Brent Thill, Azure's market share increased to 34% from 33% in the previous quarter, indicating a resurgence in growth momentum.
Thill noted that the excellent performance was driven by non-AI sectors, with accelerated cloud migration by enterprise clients and improved execution in non-AI business areas. Key drivers include increased demand for cloud migration, robust data growth, and healthy core computing consumption by cloud-native enterprises.
In contrast, AI business contributed 16 percentage points to quarterly growth, up from 13 percentage points previously. The company expects growth targets of 34% to 35% at constant currency, surpassing prior expectations and suggesting a continuation of this trend.
UBS analyst Karl Keirstead maintains a "buy" rating for Microsoft with a target price of $500. He emphasized the challenge of distinguishing AI from non-AI workloads, even though Azure's success is linked to non-AI business performance. Microsoft's improved execution, increased large enterprise migrations, and strong demand for Azure data services have also contributed to its success.
