With revenue growth of nearly 37% and a year-over-year improvement in operating income of more than 63%, there's no denying Amazon's (AMZN -1.82%) cloud computing arm experienced a fantastic second quarter. Shareholders have every reason to be happy.
Alphabet (NASDAQ: GOOG) (GOOGL +1.36%) investors, however, have even more reason to celebrate. The company's Google Cloud business grew its top line by nearly 82%, resulting in operating income growth of over 200%.
There's an important footnote to these percentage-based comparisons: Google's cloud computing business started from a markedly smaller baseline, making it easier for Alphabet to produce a relatively bigger leap. There's another footnote to add to the numbers, though: Google Cloud is gaining market share, while Amazon is losing it.
Image source: Getty Images.
Moving in different directions
The chart tells the tale. Data collected by Synergy Research Group indicates Amazon Web Services (AWS) reported 28% of Q2's worldwide total public cloud revenue, extending a downtrend that's been in place since 2022; Microsoft's share peaked in early 2024 and stands at 20%, knocking on the door of new multiyear lows. Google Cloud, conversely, continues to inflate its share of the global cloud business, reaching a new record of 15% last quarter.
Data source: Synergy Research Group. Chart by author.
Then there's the information that's not evident in the chart. That is, on a whole-dollar basis, Google Cloud revenue grew by more than $11.1 billion, almost matching -- on a dollar-for-dollar basis -- Amazon Web Services' net growth of almost $11.4 billion. That may be even more telling than the opposing shifts in market share.
NASDAQ: AMZN
Key Data Points
The little things aren't so little
It's not necessarily the end of the world for Amazon. There's certainly been enough AI-driven demand for cloud-based access to computing platforms to go around for both companies, after all, as well as for Microsoft.
From an investor's standpoint, though, it's difficult to deny that Google Cloud clearly offers something that cloud customers increasingly want.
What that is could be a variety of things. Familiarity is one of them; Google offers a range of business-facing services like email, office productivity software, and more. It may also be performance, particularly for artificial intelligence compute customers. Although Amazon's homegrown Trainium and Graviton processor chips are powerful enough to support AI outfit Anthropic's platform, Anthropic is also utilizing Google's Tensor Processing Units, as are Apple and OpenAI.
And Google provides a fully managed, AI-ready platform called BigQuery that makes it incredibly easy for any organization to do something constructive with their digital data. AWS offers similar tools, but BigQuery is widely regarded as the easiest and most cost-effective tool of its kind to use.
NASDAQ: GOOGL
Key Data Points
Built better for the future
So what? Right now, none of these nuances matters much. As noted, amid massive capital investments in artificial intelligence infrastructure, there's plenty of business to go around.
The AI spending frenzy won't last forever, though. Once it finally cools and cloud computing service providers start fighting for fewer dollars -- or at least less growth -- the seemingly little things become a big deal. From a marketability standpoint, Google Cloud already seems to have an edge on both of its bigger competitors.
