Microsoft vs Amazon: New Numbers Reveal True Competition in Cloud Market

Microsoft's decision to pull Azure out from behind years of bundled reporting has revealed some interesting numbers about its real competition. The company will now disclose standalone Azure quarterly revenue, and what that reveals is a closer relationship between Azure and Google Cloud than previously thought.

Azure crossed $100 billion in full-year revenue for the first time, with Q4 growth of 43% year-over-year and commercial RPO of $678 billion, up 84%. However, Amazon's AWS reported $42.23 billion in revenue, with 36.7% year-over-year growth, its fastest in 18 quarters.

The gap between Azure and AWS is nearly three times the size of Azure’s lead over Google Cloud, which posted $24.77 billion in revenue, accelerating to 82%. This reframes the investment thesis for MSFT shareholders, making Amazon a more significant competitor than Google.

Microsoft's structural edge lies in its enterprise distribution, with Microsoft 365 Copilot surpassing 30 million paid seats and nearly 90% of Fortune 500 companies using Foundry, Fabric, and Work IQ. The company's planned capital expenditures for FY27 are $175 billion, a claim on future free cash flow that only pays off if that distribution converts.