Google excels in the "cloud wars"

In the third quarter, Google's cloud services revenue, which includes both infrastructure and software subscriptions, increased 35% year-over-year to $11.35 billion.

Google headquarters in California, USA. (Photo: Kyodo/VNA)

Google outpaced its rivals in growth this week, a key sign that the tech company is making headway in the artificial intelligence (AI) space.

In the third quarter, Google's cloud services revenue, which includes both infrastructure and software subscriptions, increased 35% year-over-year to $11.35 billion.

Meanwhile, Amazon Web Services (AWS) revenue increased only 19% to $27.45 billion. Microsoft said revenue from Azure and other cloud services increased 33% year-over-year.

Five of the six trillion-dollar tech companies reported results this week, except Nvidia.

Amazon, Alphabet and Microsoft typically report results around the same time, giving investors a glimpse into the cloud battle.

While Alphabet is often criticized for its reliance on online advertising, Google Cloud's rapid growth has begun to help diversify the parent company's revenue, analysts at investment research firm Argus Research said.

For a long time, cloud services were seen as an unprofitable investment for Google, but that has changed. Google reported a 17% operating margin on cloud services in the third quarter, after turning a profit for the first time last year.

Melissa Otto, head of technology, media and telecommunications research at financial services firm Visible Alpha, said the results were "far above expectations" and expressed uncertainty about whether Google could sustain the gains.

Amazon, by contrast, has long relied on AWS for the bulk of its profits. AWS's operating margin in the third quarter was 38%, a result that analysts at Bernstein called "quite impressive."

AWS management has been cautious about hiring and discontinuing less-popular AWS services. Additionally, in early 2024, Amazon extended the lifespan of its servers from five years to six years, a change that boosted operating margins by 2%.

Microsoft this week began providing investors with more precise numbers about its Azure cloud service, with chief financial officer Amy Hood saying demand continues to outpace the company's ability to supply it.

While Azure's growth momentum may narrow a bit in the current quarter, Hood expects a rebound in the first half of 2025 as investments increase AI capacity to serve growing demand.

Oracle, which typically ranks fourth among U.S. cloud infrastructure companies, is expected to report quarterly results in December. In its previous report, Oracle said cloud infrastructure revenue rose 45% to $2.2 billion, up from 42% growth in the previous quarter./.

(TTXVN/Vietnam+)

Source: https://www.vietnamplus.vn/google-vuot-troi-trong-cuoc-chien-dam-may-post989086.vnp