logo
Amazon vs. Microsoft: Which Cloud Computing Giant Is the Better Buy?

Amazon vs. Microsoft: Which Cloud Computing Giant Is the Better Buy?

Globe and Mail20 hours ago
Key Points
Amazon and Microsoft are the two largest cloud computing companies.
Microsoft Azure has been growing more quickly, but a strained relationship with OpenAI leaves some questions.
Amazon's AWS, meanwhile, has a vertical integration advantage.
When it comes to cloud computing, Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) are the clear leaders. Both are seeing strong growth, both are leaning heavily into artificial intelligence (AI), and both are investing billions to meet increasing demand.
But if I had to pick just one stock to own right now, I'd go with Amazon. Let's break down why.
Amazon
While best known for its e-commerce operations, Amazon basically invented the cloud computing industry due to its own struggles trying to scale up its infrastructure. Today, Amazon Web Services (AWS) is the largest cloud computing provider in the world, with nearly 30% market share.
AWS is also both Amazon's most profitable segment and fastest-growing, with revenue climbing 17% last quarter. AI has been a big reason for this. Customers are using AWS solutions like Bedrock and SageMaker to help them build and run their own AI models and apps. Bedrock gives companies access to foundation models they can customize, while SageMaker is more of an end-to-end solution. Once these models are built, they then run on AWS infrastructure, locking customers into a recurring, high-margin business.
On top of that, Amazon has built its own custom AI chips through its Annapurna Labs unit. Trainium is designed to train large language models (LLMs), while Inferentia handles inference. These chips are optimized for performance and cost, consuming less power and delivering better results than general-purpose graphic processing units (GPUs) for specific AI tasks. This gives Amazon a cost advantage over rivals like Microsoft and should lead to better operating leverage as usage scales.
Beyond the cloud, Amazon is also using AI to improve its e-commerce business, as well. The company is now using agentic AI to power autonomous warehouse robots. These robots continue to become more sophisticated and can perform multiple tasks. Some can even spot damaged goods before they're shipped, improving customer satisfaction and reducing costly returns. It recently just surpassed 1 million robots in its warehouses.
It's also using AI to improve efficiency in its logistics operations. AI is helping map out better routes, while mapping tools like Wellspring can help delivery drivers better navigate complicated drop-offs at places like large apartment complexes.
Amazon is also using AI tools to help third-party sellers better market products and target customers more effectively. It's worth noting that its sponsored ad business has become one of the largest digital ad platforms in the world and is growing quickly.
Microsoft
There's no denying that Microsoft is a powerhouse. The company has long been the dominant player in worker productivity software with programs such as Word, Excel, and PowerPoint, and its Windows operating system powers most non- Apple computers.
However, Microsoft's cloud computing unit Azure has been its big growth driver, with AI accelerating that momentum. Last quarter, Azure revenue jumped 33% year over year (35% in constant currency), with AI services making up nearly half of the growth.
Azure is currently firing on all cylinders, but Microsoft has been running into capacity constraints. To address that, Microsoft plans to increase its capital spending in fiscal 2026. It will also shift more investment into shorter-lived assets like GPUs and servers, which it said are more directly tied to revenue.
Microsoft made an early and aggressive investment in OpenAI, and the ability to give customers access to the start-up's leading LLM is one of the biggest reasons why Azure has been taking market share in the cloud computing space. Microsoft has also deeply integrated OpenAI's technology into its own products. For example, the technology is used to help power its AI assistant copilots in Word, Excel, and other productivity tools. At $30 per month per enterprise user, Microsoft's copilots have been a nice growth driver for the company.
Microsoft has also expanded AI beyond Office 365. It's added new copilots focused on cybersecurity and even launched Muse, an AI model designed to help develop and preserve older video games. Meanwhile, its GitHub Copilot has been one of its best-performing, helping drive solid growth for its code-hosting and collaboration platform.
However, the company's relationship with OpenAI has become strained. Microsoft is no longer the exclusive data center provider for the company, and the two have been fighting over the terms of Microsoft's investment, including whether it will get access to the intellectual property of OpenAI's pending acquisition of Windsurf.
Microsoft's investment in OpenAI is one of the most attractive parts of its story. It's currently entitled to 49% of OpenAI Global LLC's profits, capped at roughly 10 times its nearly $10 billion investment. But OpenAI is looking to renegotiate the deal as it looks to restructure into a for-profit company.
The better buy
Both Amazon and Microsoft are great companies with strong cloud computing platforms and big AI opportunities. However, Amazon has the edge.
Amazon's biggest advantage is that its cloud computing platform is vertically integrated. It can provide a wide range of services from custom chips to infrastructure to high-margin services. Its Inferentia and Trainium chips are helping lower its cloud computing costs, and AWS offers a wide array of foundation AI models, both from itself and other leading tech companies.
Microsoft, meanwhile, is reliant on expensive chips from Nvidia and AI models from OpenAI, with whom tensions have been growing. Microsoft is looking to develop its own AI chips, but it was recently reported that its next-generation Maia AI chip has been delayed. Azure has been growing more quickly than AWS, but it faces a lot more unanswered questions at the moment.
Microsoft is a solid stock to own long-term, but right now, Amazon is the better buy.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!*
Now, it's worth noting Stock Advisor 's total average return is1,060% — a market-crushing outperformance compared to180%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of June 30, 2025
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Imagen Network (IMAGE) to Raise $420 Million for Growth Using Circle's USDC and Ripple's RLUSD Stablecoins
Imagen Network (IMAGE) to Raise $420 Million for Growth Using Circle's USDC and Ripple's RLUSD Stablecoins

Globe and Mail

time43 minutes ago

  • Globe and Mail

Imagen Network (IMAGE) to Raise $420 Million for Growth Using Circle's USDC and Ripple's RLUSD Stablecoins

Subtitle: Multichain capital raise will fund AI development, ecosystem expansion, and decentralized infrastructure at scale. Singapore, Singapore--(Newsfile Corp. - July 7, 2025) - Imagen Network, the first AI-powered decentralized social platform, has announced plans to raise $420 million in capital using stablecoins USDC and RLUSD. The funds will be used to accelerate the development of Imagen's AI engine, expand its multichain infrastructure, and grow creator-focused tools and communities across Ethereum, BNB Chain, and Solana. To view an enhanced version of this graphic, please visit: This strategic raise leverages Circle's USDC and Ripple Labs' RLUSD to ensure transparent, compliant, and stable contributions while offering global access to institutional and individual supporters. The move highlights Imagen's focus on building secure, scalable social infrastructure while maintaining liquidity across multiple chains. Funds will be allocated to infrastructure upgrades, smart moderation tools, AI-powered content engines, creator onboarding, and decentralized identity modules. A significant portion will also back ecosystem incentives, node deployment, and liquidity for the $IMAGE token's utility across decentralized applications. By combining stablecoin-backed financing with advanced AI social systems, Imagen Network is setting a new benchmark for transparency, funding accessibility, and Web3-native innovation—empowering users to truly own their content, identity, and engagement. About Imagen Network Imagen Network is a decentralized social platform that blends AI content generation with blockchain infrastructure to give users creative control and data ownership. Through tools like adaptive filters and tokenized engagement, Imagen fosters a new paradigm of secure, expressive, and community-driven networking. Media Contact Dorothy Marley KaJ Labs +1 707-622-6168 media@ Social Media Twitter Instagram

Top Analyst Ratings From Last Week
Top Analyst Ratings From Last Week

Globe and Mail

timean hour ago

  • Globe and Mail

Top Analyst Ratings From Last Week

Top Analyst Ratings Adobe (ADBE) was downgraded to Sell by Rothschild & Co. with a target price of $280. Alphabet Inc. (GOOGL) had its target price updated to $160 by Loop Capital, maintaining a Hold rating. Amazon (AMZN) was reiterated with a Buy rating by Truist Financial, which raised its target price to $250. Apple Inc. (AAPL) was upgraded to Hold by Jefferies with a target price of $188. Coinbase (COIN) maintained its Buy rating at Bernstein with a target price of $510. Datadog (DDOG) had its target updated to $170 by Wedbush, maintaining a Buy rating. Microsoft Corp. (MSFT) was reiterated as a Buy by DA Davidson with a raised target price of $600. Netflix (NFLX) had its target price increased to $1,140 by Goldman Sachs, which maintained a Neutral rating. Tesla Inc. (TSLA) maintained an Outperform rating at Wedbush with a target price of $500. Zscaler (ZS) was reiterated as Outperform by JMP Securities with a raised target of $355.

The week ahead: Investors eye tariff deadline as U.S. stocks rally
The week ahead: Investors eye tariff deadline as U.S. stocks rally

Globe and Mail

timean hour ago

  • Globe and Mail

The week ahead: Investors eye tariff deadline as U.S. stocks rally

Investors will be keeping a close eye on tariff headlines out of Washington next week, as a temporary suspension of punitive import levies is set to expire. If that Wednesday deadline passes without an increase in trade tensions, it could prove positive for the markets. Negotiators from more than a dozen major U.S. trading partners are rushing to reach agreements with U.S. President Donald Trump's administration by July 9 to avoid even higher tariffs, and Mr. Trump and his team have kept up the pressure in recent days. On Wednesday, Mr. Trump announced a deal with Vietnam that he says will impose a lower-than-promised 20-per-cent tariff on many Vietnamese exports. While the administration has teased a forthcoming deal with India, talks with Japan, the sixth-largest U.S. trading partner and closest ally in Asia, appeared to hit roadblocks. Investors have shifted from panicking about tariffs to relief buying, recently lifting the U.S. stock market back to record highs, with corporate earnings and the U.S. economy holding up better than many had expected through a period of dramatic policy change. The S&P 500 has risen about 26 per cent from April 8, when stocks bottomed following Mr. Trump's draconian April 2 tariff announcement. But much of the rally has been driven by retail market participants and corporate share buybacks, even as institutional investors have been more reticent. Despite the S&P 500 making new highs, equity positioning is far below February levels as investors remain underweight stocks, according to Deutsche Bank estimates. 'This has definitely been a junkier rally, a more speculative rally,' Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. 'In the last week or so, it's been driven a lot more, I think, by retail than it has been by institutions. Institutional positioning is really just average,' she said. While many factors are keeping investors cautious, including worries about U.S. economic growth and lofty stock market valuations, getting past the tariff deadline without a major escalation in tensions would be one less thing to worry about in the near term, analysts said. 'I think that there may be some threats and saber-rattling, but I don't really think that any of that now poses a major danger to the market,' said Irene Tunkel, chief U.S. equities strategist, BCA Research. Still, investors don't expect the tariff deadline to put an end to trade tensions for good. 'I don't view it necessarily as a hard deadline,' said Julian McManus, portfolio manager at Janus Henderson Investors. 'The 90-day pause itself was instituted because the markets were falling apart, and I think policymakers needed breathing room and time to try and negotiate these deals or find some kind of off ramp,' he said. Investors' cautious approach to boosting equity exposure now is reminiscent of their behaviour immediately after the pandemic market drop of March 2020, when allocations to stocks recovered more slowly than major market indexes, Deutsche Bank strategist Parag Thatte, said. 'It does mean that there is room for exposures to keep rising, which is a positive for equities all else equal,' Mr. Thatte said. After a roller-coaster first half, the S&P 500 is entering a historically strong period. Over the past 20 years, July has been the strongest month for the benchmark index with an average return of 2.5 per cent, according to a Reuters analysis of LSEG data. Investors will also be keeping an eye on economic data - especially inflation numbers - and second quarter results in coming weeks for clues to the health of the U.S. economy, and the Federal Reserve interest rate outlook. 'We're right at the point where institutions are going to have to decide one way or the other, do they believe the rally or not,' Morgan Stanley's Shalett said. Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store