Microsoft’s Azure becoming a threat for Amazon

As Microsoft’s annualized commercial cloud revenue run rate was updated, analysts are getting more optimistic about the company’s ace, Azure.

Last Thursday, Microsoft announced their annualized commercial cloud revenue run rate. According to that, the company stock price ended up with 45 cents diminished. Nevertheless, to the major of analysts, this means that Microsoft is becoming an invincible giant in the field of cloud computing, squarely competing with Amazon.

Microsoft is surpassing AWS

It is highlighted on Business Insider that Microsoft is getting close to Satya Nadella’s assurance declared in 2015 that operating cloud computing would bring the company an annual turnover of $20-billion by 2018. The latest report of $18.9 billion yielded, which means an increase of 97% compared to the same period last year, has shown that Microsoft is fulfilling their goal earlier than expected.

Satya Nadella’s assurance about an annual takings of $20 million is closer than ever

It is reported by The Street that, in their Q1 earnings report, AWS’s growth rate has declined 43% compared to the same period last year, bringing Amazon $3.6 million.

Analysts from KeyBanc indicated that Amazon’s modest growth would make them fall behind Microsoft soon. That Microsoft will earn $50 billion from cloud computing by 2021 and become the new ruler in this field is in experts’ prediction. The company, therefore, is expecting their price targets to hit $82.

Brent Bracelin, an expert of Pacific Crest Securities, estimated that Microsoft’s Commercial Cloud division would overwhelm Amazon Web Service. Patrick Moorhead, who is the Founder, President and Principal Analyst at Moor Insights & Strategy, also believes that Microsoft will need no more than 18 months or 02 years to dethrone Amazon from now on.


“The key is that AWS got this big lead. It took a while for the public cloud folks to get there and Azure really jumped on it. Microsoft really knows how to speak enterprise, where I would say AWS is learning how to speak enterprise, but speaks startup and developer really well.” Mr. Moorhead explained.

He also believes that Microsoft’s hybrid cloud, which is developed by the company to have Azure Stack leveled up, will play the role of an ace up their sleeve to surpass AWS. “I expect Azure to narrow AWS's lead in the public cloud, but Azure Stack will be its secret weapon.” Moorhead highlighted.

Inspiring assessments given by analysts

Philip Winslow of Wells Fargo praised Microsoft’s forceful execution with 97% revenue growth in Azure. The last quarter was the 12th successive period of triple-digit revenue growth in Azure premium services, and the gross profit has gone beyond experts’ estimations. Winslow is convinced that all these accomplishments are just paving the way for a series of earnings opportunities harvested from Azure and Office 365.


While Credit Suisse’s analyst Michael Nemeroff expected Microsoft’s price target to reach $84, Raimo Lenschow of Barclays appeared to be similarly optimistic when raising the price target from $77 to $82. In the mealtime, Keith Bachman of BMO Capital Markets did not hesitate to boost Microsoft’s price target from $75 to $86, and from $81 to $87 by Bernstein’s Mark Moerdler as this analyst uncovered his trust in Microsoft’s cloud investment strategy.

Aside from huge achievements obtained from cloud computing, a 4% growth in server sales and 1% growth in Windows equipment have unquestionably pleased Microsoft operators, despite a decrease of 4% in overall PC market in the quarter, especially when the income from cloud services has increased 20%, and the enterprise computing market is estimated to be worth $3 trillion by the experts.

By: Chris Stewart

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