AWS, Amazon’s cloud business, has enjoyed a long run as undisputed heavyweight champion of the cloud wars. With revenue run rate nearing 36 Billion and continuous double-digit market growth it was difficult to see anyone catching up. Until just like that, in the blink of an eye, a $10 Billion Federal cloud contract for the DoD known as JEDI (Joint Enterprise Defense Infrastructure) was awarded to Amazon’s crosstown rival, Microsoft. With this award, I believe the game has changed, and the market perception of such a substantial win will provide Microsoft the opportunity to apply significant pressure to AWS’s number one market position.
This week’s earnings may have been the first domino
Microsoft has been on an unparalleled run, and this past week the company delivered well above expectations on earnings coming in at $1.38 per share vs. $1.25 expected while also substantially beating revenue targets by nearly $800 million at $33.06 Billion. The cloud business, Azure, grew 59%*, which was actually viewed as a mooted result compared to previous quarters in the 60-70% range, but with margins up, revenues up and earnings up, Microsoft is flying high.