Microsoft and Google Cloud are making progress in the cloud services market, closing the gap with AWS. In the recent quarter ending June 2025, both companies reported strong earnings, indicating positive growth.
On July 31, 2025, Microsoft stock saw a significant rise of roughly 4-5%, elevating its market value to around $4.01 trillion during that trading session. This achievement makes Microsoft only the second publicly traded company to exceed a $4 trillion valuation, after NVIDIA.
Analysts believe Microsoft’s exclusive partnership with OpenAI has made Azure the top choice for AI-focused companies, moving it ahead of competitors.
“Since GPT-4’s launch, Azure has consistently added more to its ARR than AWS. In two of the previous eight quarters, Google has booked more new ARR than Amazon,” said Tomasz Tunguz, venture capitalist at Theory Ventures. “Both Microsoft & Google have stronger AI value propositions than Amazon with OpenAI models & Gemini models. And it shows in their growth rates.”
While Microsoft does not usually disclose Azure’s quarterly figures, CEO Satya Nadella reported Azure’s annualised run-rate for the first time during Q4 (ending June 2025). “Azure surpassed $75 billion in annual revenue, up 34%,” he said during the earnings, adding that Microsoft “took [share] every quarter this year”. In comparison, Google Cloud’s annual revenue run-rate was $50 billion.
Microsoft’s Intelligent Cloud segment, which includes Azure and server products, reached $29.9 billion in the quarter ending June 2025, a 26% increase year-on-year. Meanwhile, AWS generated $30.9 billion in sales, up 17.5%. And Google Cloud reported a revenue of $13.6 billion, up 32%.
AWS still leads in scale, but Azure and Google Cloud grow faster. AWS’s 17.5% revenue growth lags behind its competitors. AWS now has an annualised revenue run rate of $123 billion.
Tunguz noted that with Azure and Google Cloud Platform expanding more rapidly than AWS, the once-dominant incumbent’s market position could result in three equally strong players. “The next trillion dollars in cloud revenue will flow to the platforms that best integrate AI into every layer of their stack,” he said.
That said, AWS continues to lead the global cloud infrastructure services market, securing a 30% share in Q2 2025 (ending June), according to the latest figures from Synergy Research Group.
Microsoft followed suit with 20% market share, while Google Cloud claimed 13% during the same period.
“This is a good time to be a cloud provider. Despite being on the verge of becoming a hundred billion dollar per quarter market, cloud revenues are still growing by around 25% per year, and we are forecasting that average annual growth over the next five years will remain above 20%,” said John Dinsdale, a chief Analyst at Synergy Research Group in their latest research report on cloud market.
GenAI has dramatically accelerated what was already a large and fast-growing market, he added. “In Q2, we saw growth of 140–180% in GenAI-specific cloud services,” Dinsdale said, adding that AI is also driving additional gains across the broader cloud portfolio.
Beyond enterprise cloud, the impact extends to digital services as well, with strong double-digit growth seen in social media and search revenues.
Azure Rocks
During the earnings call, Nadella said that every Azure region is now AI-first.
He said that software improvements have dramatically boosted efficiency across the GPT-4o family of models running on Azure. “Through software optimisations alone, we are delivering 90% more tokens for the same GPU compared to a year ago,” he said.
Nadella further added that the company has opened new Data centres across six continents, totalling 400 data centres across 70 regions. Moreover, Microsoft said it plans to spend a record $30 billion on capital expenditure in the first quarter of this fiscal year (ending September 2025).
Citing OpenAI as an example, he shared that Azure is powering mission-critical workloads at scale. “Cosmos DB is in the hot path of every ChatGPT interaction, storing chat history, user profiles, and conversational state,” Nadella said, adding that Azure PostgreSQL handles metadata essential to ChatGPT’s functioning and OpenAI’s developer APIs.
AWS Expands AI Stack
Meanwhile, Amazon CEO Andy Jassy said that AWS is seeing strong demand for its generative AI offerings and described it as a fast-growing multibillion-dollar business, with demand outpacing supply.
He added that AWS continues to support organisations of all sizes in their cloud transition, recently signing agreements with companies like PepsiCo, Airbnb, Peloton, NASDAQ, London Stock Exchange, Nissan Motor, GitLab, SAP, Warner Bros. Discovery, 12 Labs, FICO, Iberia Airlines, SK Telecom, and NatWest.
Jassy shared updates on AWS’s AI stack across hardware, foundation models, developer tools, and applications.
On the hardware front, Jassy said, “Trainium2 is landing capacity in larger quantities and has emerged as the backbone for Anthropic’s newest generation Claude models and many of our most essential offerings like Amazon Bedrock.” AWS has also launched EC2 instances powered by NVIDIA Grace Blackwell Superchips, its most powerful GPU-accelerated offering to date.
In foundation models, Jassy noted that Anthropic’s Claude 4 is “the fastest-growing model ever in Bedrock.” Amazon’s model, Nova, has seen strong adoption and is now the second most popular on the platform.
AWS also launched Kiro, a new agentic IDE. “There’s a lot of buzz around Kiro,” Jassy said. The platform attracted more than 100,000 developers in the first five days of preview.
Google is Upping the Game
Google CEO Sundar Pichai highlighted strong enterprise momentum for Google Cloud and its Gemini platform in the first half of 2025. He said that the number of deals over $250 million doubled year-over-year, and that in the first half of 2025, the company signed the same number of deals over $1 billion as it did in all of 2024.
Pichai also shared that the number of new Google Cloud Platform customers rose nearly 28% quarter-over-quarter. “More than 85,000 enterprises, including LVMH, Salesforce, and Singapore’s DBS Bank, now build with Gemini,” he said, adding that this has driven a 35x increase in Gemini usage year-over-year.
Google has also partnered with OpenAI to offer its cloud services. “Google Cloud is an open platform, and we have a strong history of supporting great companies, start-ups, AI labs, et cetera,” said Pichai.
The post Microsoft Azure, Google Cloud Gobble Up AWS appeared first on Analytics India Magazine.
