Amazon Beats Microsoft on Key Cloud Metric

Amazon and Microsoft are two of the largest cloud computing providers, but which one is the better investment? A key metric separates the two firms, and it's AWS' operating margin. During Q2, AWS' operating margin was 39%, making it comparatively impressive compared to other cloud computing firms.

AWS growth rate has been accelerating rapidly, with a growth rate of 28% in Q1, 24% in Q4 2025, and 20% in Q3 2025. In contrast, Microsoft Azure's growth rate has remained fairly constant at around 40-43%. This rapid acceleration in AWS' growth rate is expected to continue, driven by Amazon's massive investments in expanding its cloud computing capacity.

Amazon's profits are also expected to increase rapidly as a result of AWS' growth. With each dollar brought in, Azure is a relative drag on Microsoft's profits, making Amazon the better stock to buy over Microsoft.