Amazon Gaining Momentum in Cloud Computing as Google Leads the Pack

The cloud computing arena is dominated by Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOG) (GOOGL). All three companies have thriving cloud businesses, but one of them stands out as a potential loser. According to recent earnings reports, Google Cloud led the way with an 82% year-over-year growth rate.

At first glance, it might seem like Amazon is the loser since its AWS business grew at a slower pace of 37%. However, the author argues that Amazon is actually gaining momentum and could easily surpass Microsoft's growth rate in future quarters. In fact, AWS' growth rate accelerated from 28% in the first quarter to 37% in the second quarter.

The market may have reacted positively to Microsoft's earnings report, but the author remains skeptical of its cloud business due to a lack of rapid acceleration in growth rates. On the other hand, Alphabet and Amazon are positioned well for long-term success in the AI build-out, with Google Cloud benefiting from custom AI chips that provide cheaper computing costs.

In the long term, the cloud computing companies will likely be the ultimate winners of the AI infrastructure market, as they can earn back hundreds of billions of dollars spent on computing capacity through rental fees. The author concludes that Alphabet and Amazon are better buys than Microsoft for the long term, but notes that Microsoft could still join them if it reports rapid cloud growth in its next quarter.