It’s often said that cloud computing is riding a wave of growth, finding itself at the forefront of the digital transformation. But what are the facts? Lets take a look at Google Cloud who’ve just had their best year in their history. After that we’ll hear a little about Microsoft Azure’s financial woes.
Google Cloud’s Best Year Ever
Google Cloud appears to be doing very well. Sales are strong and so is their rising stock price. This comes as a welcome relief for the company who have been operating in the red for several years. CRN says Google Cloud “improved its operating income by nearly $1 billion year over year in Q2 2023”.
This has been Google Cloud’s most profitable year ever. It’s thought to be due to slowed recruitment and the development of AI. Google Cloud, despite fierce competition from AWS and Microsoft, is growing even faster than its parent company. But who knows how long it could last. Only a year ago the company reported a loss of $590 million.
Sundar Pichai, CEO of Google and Alphabet said…
“I’m definitely excited about what’s ahead [for Google Cloud],” … “All the investments we’re doing in AI across Alphabet—including the work we’re doing in Google DeepMind, and Google research and on Gemini and so on—are directly applicable to cloud as well.”
Microsoft Azure Facing Decline
But it’s not all rosy in the cloud market. Bloomberg has reported lacklustre sales and growth prospects for Microsoft Azure. They say the company is facing a rather bleak outlook, with shares down 3% and predictions of an ongoing decline.
The company’s fourth quarter earnings show a sequential decline despite recent high profits and revenues. Earlier this week, Microsoft reported revenue growth of 26% year over year for the fourth quarter. That’s down 1% from the previous quarter. This figure has been falling for Microsoft Azure since the third quarter of 2022, if not earlier.
Satya Nadella, Microsoft’s CEO said…
“[It is] still early innings of the cloud migration itself, so there’s a lot there still,” … “And then on top of that, there’s this complete new world of AI driving a set of new workloads … We do think that this is a business that can have sustained high growth, which is something that, we are excited about.”
Conclusion
As with any sector as young as the cloud, companies are faced with unprecedented challenges and unpredictable results. Google Cloud and Microsoft Azure, while similar in many ways, find themselves in entirely different situations. It’ll be interesting to see how the market changes in the coming years. Do you think Microsoft Azure can reestablish confidence after their recent losses?
