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 field of artificial intelligence (AI).

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 rose just 19% to $27.45 billion, while Microsoft said revenue from Azure and other cloud services rose 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 snapshot of 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 its 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, called the results “a big step forward,” but expressed uncertainty about whether Google can sustain those profits.

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 Bernstein analysts 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 has boosted operating margins by 2%.

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

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

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

(Vietnam+)

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