Dive Transient:
- Amazon CEO Andy Jassy touted the dimensions benefit AWS holds over its closest cloud opponents — Microsoft and Google — Thursday throughout the firm’s Q2 2025 earnings call for the three-months ending June 30.
- “Now we have a meaningfully bigger enterprise within the AWS section than others,” Jassy stated, pointing to the cloud unit’s $123 billion in annualized income run price. “I feel the second participant is about 65% of the dimensions of AWS.”
- Jassy additionally alluded to Microsoft’s current and ongoing cyber points tied to vulnerabilities in the SharePoint document management tool. “There are very totally different ends in safety in AWS than you may see in different gamers,” he stated. “You might simply undergo what’s occurred the final couple of months … you may see sort of ‘adventures’ at a few of these gamers nearly each month.”
Dive Perception:
AWS has lengthy been king of the hill in cloud, defending its main share of the steadily rising marketplace for infrastructure and compute companies. The hyperscaler elevated income 17.5% 12 months over 12 months to $30.9 billion in Q2 and reported practically $108 billion in 2024 income, a 19% improve over the prior 12 months.
Microsoft, by comparability, noticed Azure cloud revenue spike 34% to $75 billion throughout its most up-to-date fiscal 12 months. The corporate had not beforehand reported Azure financials individually from different companies bundled in its Clever Cloud section. Google Cloud, which skilled its first profitable quarter greater than two years in the past, grew its annual income 31% to $43.4 billion in 2024.
Whereas the fast rise of enormous language mannequin applied sciences didn’t shuffle the standings in Q2, generative AI adoption continued to stoke demand for cloud. International spend on cloud companies elevated practically 25% to $99 billion throughout the three-month interval, pushed by triple-digit progress in cloud-based AI, in response to a Thursday Synergy Research Group report. AWS, Microsoft and Google Cloud break up the lion’s share of cloud spend, commanding 30%, 20% and 13% of the market, respectively.
“Take a bow Gen AI, which has lit a hearth below cloud service growth and helped to propel the market to new highs,” SRG Chief Analyst John Dinsdale stated in an e mail. “We noticed progress of 140-180% in Gen AI-specific cloud companies, and AI can also be contributing to enhancements and added progress throughout the broader portfolio of cloud companies.”
The development triggered an ongoing hyperscale race to add capacity. Amazon led the pack, committing $100 billion to capital investments in cloud infrastructure this 12 months. The corporate piled $31.4 billion in Q2 investments on high of the practically $25 billion it spent within the first quarter and expects CapEx to stay at that degree by the again half of the 12 months, in response to CFO Brian Olsavsky.
“Now we have extra demand than we’ve capability at this level,” Olsavsky stated. “We’ll proceed to take a position extra capital in chips, knowledge facilities and energy to pursue this unusually giant alternative that we’ve in generative AI.”
AWS is steadily including to its stockpile of AI capabilities. The corporate deployed AI agent-building platform AgentCore together with coding assistant agent Kiro final month, and rolled out open-source AI agent developer tool Strands Brokers in Might.
AWS’ backlog cloud enterprise has grown consistent with AI adoption, growing year-over-year by 25% to $195 billion, in response to Jassy, who stated he expects capability constraints to ease progressively over the subsequent a number of quarters.
“The one largest constraint is energy,” Jassy stated. “You additionally see constraints on and off with chips … I feel it can take a number of quarters, however I do anticipate it should get higher every quarter.”
