Amazon has recently informed of 37% growth in their cloud business on July 25. Analysts had estimated much more for Amazon but they missed it. However, Microsoft has been gearing up again. The results have overall affected Amazon. Amazon Web Services that gives storage and computing for corporations, government organizations and schools commented that their revenue in second quarter has increased to $8.38 billion. FactSet mentioned that the average prediction from analysts had been $8.48 billion. Growth has decreased from 41% in the last quarter.
AWS is still a necessary part of bringing profit to Amazon which ranks second in the list of most valuable public company. Cloud market has proved to be advantageous for Amazon as it has left behind rivals like Oracle, Google, Microsoft and IBM. However, Azure business of Microsoft has been growing at a rapid rate and has been positioned as second in the list. During last week, Microsoft informed a 64% revenue growth for Azure sales. AWS has earned $2.12 billion in operating income during the quarter. They went up from $1.64 billion per year before and even lesser than FactSet consensus estimate which was $2.45 billion.
During the second quarter, Slack, communications app provider told they had promised to spend minimum of $250 million on AWS for the period of five years. That is the recent figure after going public because more of AWS’s customers ask for IPOs and expose their heavy spending on cloud. Lyft, a ride hailing company told in their prospectus that they have promised in spending minimum of $300 million on AWS in the course of three years from 2019 to 2021. Pinterest has also told of spending at least $750 million in six years’ time for AWS which would end in July 2023. The revenue from AWS is 13% of the total revenue by Amazon. Of the total $3.1 billion in operating income of Amazon, 52% was from AWS.