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Microsoft vs. Amazon: Which Cloud-Computing Stock Will Outperform in 2025?

Wesley ParkFriday, Jan 3, 2025 5:58 am ET
3min read


As we approach the midpoint of 2024, investors are wondering which cloud-computing stock will outperform in the coming year. Two giants in the tech industry, Microsoft (MSFT) and Amazon (AMZN), have emerged as strong contenders in the cloud-computing space. Let's examine their AI strategies, cloud services, and market positions to determine which stock is better positioned for 2025.



1. AI Strategies and Investments:

Both Microsoft and Amazon have made significant investments in AI research and development, with Microsoft allocating $55.7 billion in 2024 and Amazon investing around $75 billion in the same year. Microsoft's AI strategy is centered around its partnership with OpenAI, which has led to the development of the AI virtual assistant Copilot. Copilot is now embedded in Microsoft's flagship software products, including Windows, Edge, and Bing, and can also be added to the 365 productivity suite for an extra monthly subscription fee. Amazon, on the other hand, is integrating AI into its entire customer experience, offering a virtual shopping assistant called Rufus and using AI in its fulfillment centers to identify defective products.

AMZN, MSFT ASI(ASI Value)


2. Cloud Services and Market Penetration:

Microsoft's Azure has a 20% market share in the cloud-computing space, while Amazon's AWS has a 31% share. Although AWS has a higher market share, Azure's 20% share is still significant and indicates a strong presence in the market. Both companies offer a range of AI services within their cloud platforms, catering to the needs of different types of customers, such as enterprises, startups, and developers. Microsoft's Azure AI services include Azure AI Platform and Azure AI Builder, while Amazon's AWS AI services include Amazon SageMaker and Amazon Bedrock.



3. Cloud Security and Compliance:

Microsoft and Amazon have distinct approaches to cloud security and compliance, which impact their market positions. Microsoft emphasizes a multi-layered security approach, focusing on both physical and digital security measures. They invest heavily in data centers, network infrastructure, and advanced threat detection systems to protect customer data. Amazon, on the other hand, focuses on providing a broad set of security and compliance features within its AWS platform, with an emphasis on customer control and flexibility. Both companies offer robust customer support services, including technical experts, support plans, and self-service resources, to help customers optimize their cloud environments.

In conclusion, while Amazon's AWS has a larger market share and a more established presence in the cloud-computing industry, Microsoft's Azure is a strong competitor with significant investments in AI and a robust set of cloud services. Both companies have unique approaches to cloud security and compliance, catering to the needs of different types of customers. Ultimately, the choice between Microsoft Azure and Amazon AWS will depend on the specific needs and preferences of each customer. As we look ahead to 2025, both stocks are well-positioned to capitalize on the growing demand for cloud-computing services.
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The_Sparky01
01/03
$BB “The rebranding effort was driven by input from customers, partners, employees, and stakeholders, according to the company.” Let's get it out there, $AMZN. We know you're a fan of that berry.
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daarkann
01/03
$MSFT is absolute crap. I can't believe I wasted $400 on it.
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mmmoctopie
01/03
$AMZN's puts are now printing! 🤗
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Anklebreakers10
01/03
$MSFT - No sell, just buy. Hold on for a decade.
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Fauster
01/03
Evercore ISI Maintains Outperform Rating on $MSFT, PT $500 Analyst comments: "Is there potential for a'mini revenge trade' in 2025? With Microsoft shares up 12% in 2024, despite a 7% dip from Dec 17 to Dec 31, we often get asked: 'what's wrong with MSFT?'. Although it's understandable given MSFT hasn't lagged behind the S&P 500 or the IGV since 2012, we believe the outlook for next year remains positive due to prospects like: 1) Azure seeing growth in the first half of CY25; 2) Potential cap-ex moderation later in CY25, leading to increased FCF growth in CY26; 3) Accelerated Copilot adoption as customers organize their data estates, potentially boosting M365 ARPC. Despite its massive market cap, MSFT has been relatively overlooked compared to the broader software market, suggesting a 'catch up' trade might happen in 2025. Historically, in four instances over the past decade when MSFT lagged the S&P 500, the IGV, or both, it outperformed by an average of 22% the following year and rose 42% on an absolute basis. While the sample size is small, we believe MSFT's 'bounce back' potential stems from its diverse enterprise products, recurring revenue streams, and strong financial position. At a market cap of over $3 trillion, MSFT is a large ship to navigate, but we think a'mini revenge' trade next year is within reach." Analyst: Kirk Materne
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AGNES MORALES
01/03

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foo-bar-nlogn-100
01/03
Microsoft's investment in AI is massive. $55.7B shows they're serious about staying ahead in the AI race.
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smooth_and_rough
01/03
Microsoft's Copilot might outshine Amazon's Rufus.
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mmmoctopie
01/03
Azure's 20% market share might be less than AWS, but it's a solid start. Microsoft's got momentum.
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daynightcase
01/03
Cloud security is paramount. Microsoft's multi-layered approach gives me peace of mind for enterprise-level protection.
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Zestyclose_Gap_100
01/03
Azure's AI growth potential is pretty 🔥
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lem_lel
01/03
Holding $MSFT and $AMZN for long-term AI potential. Cloud wars drive innovation, and I'm in for the ride.
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applesandpearss
01/03
AWS has a stronghold, but Microsoft's AI push could shake things up. Exciting times for cloud investors!
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Jazzlike-Check9040
01/03
AWS has a stronghold, but Azure's growth potential intrigues me. Diversification is key in cloud computing.
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SelectHuckleberrys
01/03
Amazon's $75B AI spend is wild. Rufus and AI in fulfillment centers show they're serious about AI integration.
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