Cloud Computing Giants Show Divergent Growth Rates

The cloud computing market is dominated by three giants: Amazon, Alphabet, and Microsoft. These companies hold two-thirds of the market share combined.

However, their growth rates differ significantly. While Amazon Web Services (AWS) holds the largest market share, its revenue rose 37% year over year in the second quarter, marking a significant acceleration from last year's low 20% range.

Alphabet's Google Cloud is having the most impressive performance, with revenue rising 82% year over year. Its operating margin also improved to 36%, a major improvement from years past.

Microsoft Azure, on the other hand, grew at a 43% pace in the second quarter, but its growth rate has hardly changed over the past few quarters. As a result, Microsoft is considered an avoid for now, unless it can start reporting meaningful revenue acceleration in its Azure division.