Azure's Market Share Surges 34% as Cloud Migration Accelerates

Microsoft's Azure has recently outperformed Amazon's AWS and Alphabet's Google Cloud, according to the latest financial reports from major U.S. tech giants. Analysts on Wall Street have been discussing the reasons behind Azure's superior performance.

Brent Thill, an analyst from a prominent financial firm, noted that Azure regained its growth momentum in the latest quarter, with a market share increase of 34%, up from 33% in the previous quarter. While the overall growth in cloud computing remains impressive, Thill suggests that Azure's outstanding performance may not be solely attributed to artificial intelligence.

Thill explained, "The exceptional performance was driven by non-artificial intelligence sectors. The acceleration in enterprise cloud migration and improved execution in non-artificial intelligence businesses were key factors. In terms of core cloud demand, Microsoft highlighted the accelerated growth in cloud migration needs, robust data growth, and healthy core computing consumption by cloud-native enterprises as crucial drivers."

In contrast, the contribution of artificial intelligence business to this quarter's growth was 16 percentage points, slightly higher than the 13 percentage points in the previous quarter due to some easing of supply constraints. Additionally, the company's growth target, calculated at a fixed exchange rate, is projected to be between 34% and 35%, exceeding some prior expectations. This indicates that the trend may continue.

Karl Keirstead, another analyst, gave Microsoft a "buy" rating with a target price of 500 dollars. He noted that distinguishing between artificial intelligence workloads and non-artificial intelligence workloads is becoming increasingly difficult, even though Azure's strong performance is linked to the performance of non-artificial intelligence businesses.

However, Microsoft also benefits from improved execution, increased migration by large enterprises, and overall strong demand for Azure data services. Keirstead stated, "The explanation for migration has become a consensus, at least consistent with our previous survey results. In our view, Azure has indeed benefited more from large workloads such as SAP, Oracle, and VMware."

Other possible explanations include the transition of "internal" server products to Azure, OpenAI becoming a native Azure core service customer, and an increase in the number of small and medium-sized enterprises using Azure.