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Cloud Giant Earnings Reports Belie Perceived AWS GenAI Weakness

• By David Ramel
• 11/06/2024

So much for Amazon's supposed slow embrace of GenAI purportedly giving fellow cloud giants Microsoft and Google an edge up in their perennial chase of cloud computing dominance.

Amazon pretty much put that industry canard to rest with a strong earnings report cementing its No. 1 standing in the cloud market, helped by quickly growing AI initiatives in the company, especially in the Amazon Web Services (AWS) cloud computing platform.

The Q3 2024 earnings reports paint a familiar picture: Amazon still leads, with others keep catching up in some metrics such as year-over-year growth, but things don't seem to have changed much, AI lag or no AI lag. This graphic shows comparative annual revenue and annual run rates (projected annual revenue) for the three cloud giants' cloud computing platforms, AWS, Microsoft Azure and Google Cloud:

Amazon is still No. 1 in the all-important market share metric, also.

"In terms of competitive positioning, Amazon maintains a strong lead in the market though Microsoft and Google again had higher percentage growth numbers," reported research firm Synergy Research Group last week. "All three have seen their growth rates increase from twelve months ago, with particularly strong improvements at Amazon and Google. Their Q3 worldwide market shares were 31%, 20% and 13% respectively. Among the tier two cloud providers, those with the highest year-on-year growth rates include Oracle, Huawei, Snowflake and Cloudflare."

Overall, Synergy reports, the market shows a new upswing tend in growth rate that started about a year ago.

As far as the impact of AI -- where AWS supposedly lagged after Microsoft got a head start due to its massive investment in GenAI pioneer OpenAI, which caused Google to famously declare a "code red" to catch up -- here is what the site IoT Analytics had to say last month:

• 22% of recently announced cloud implementations had an AI element, according to the 188-page Global Cloud Projects Report and Database 2024. The data shows that AI has become a driver for cloud demand, with generative AI (GenAI) playing an increasing role. [Editor's note: That is a for-pay report]
• According to the data, Microsoft is leading the overall AI and GenAI race. AWS leads in traditional AI, while Google has the highest share of AI customers.

Here's a graphic from that article:

Here's what Amazon CEO Andy Jassy said about AI in an earnings call transcript published by The Motley Fool, noting the surprising growth of the company's AI business:

"The AWS team continues to make rapid progress in delivering AI capabilities for customers in building a substantial AI business," Jassy said. "In the last 18 months, AWS has released nearly twice as many machine learning and gen AI features as the other leading cloud providers combined.

"AWS's AI business is a multibillion-dollar revenue run rate business that continues to grow at a triple-digit year-over-year percentage and is growing more than three times faster at this stage of its evolution as AWS itself grew, and we felt like AWS grew pretty quickly."

It looks like AWS effectively mitigated a new tech space threat from its competitors hoping to leverage their early AI-related initiatives to gain market share in the cloud computing wars.