Financial performance of top 3-Clouds and their parent companies

Last week, we all saw quarterly earning reports announcements from all the companies. I was specifically interested in top-3-cloud players ( Microsoft Azure, Amazon AWS and Google Cloud ) and their parent companies performance.

With the announcements stock prices of the companies were changed (mostly down as they were below the market expectations) and Microsoft became the No.2 most valuable company in the world overtaking Amazon.

Let's first compare the Quarterly (July-Sep 2018) performance of 3-parent companies and see how Market Capitalization changed in Microsoft's favor.

Let me summarize above financial Q numbers,

• All the companies stocks went down as the result were below the expectation. But, Microsoft shares were least impacted and Amazon was the most impacted. Due to this Microsoft overtook Amazon and became No.2 Most valuable company (based on Market Capitalization) in the world followed by Apple.
• Market Capitalization is driven by Share holder's sentiments (directly driven by stock price which is driven by expectation how the company would perform in the future).
• If we see Amazon and Google both have more revenues than Microsoft, but if you see Net Income, Microsoft is clearly ahead here. So, lower revenue but better Income. This has driven the shares of Microsoft up.
• If we see P/E ratio , Amazon is clearly very expensive stock and Google is the cheapest. The reasons are sentiments. Shareholders were expecting too much from Amazon and Google is down due to Data privacy issues like Facebook ( If you remember Google was No.2 most valued company few months back)

Now, let's compare Cloud performance of all 3-companies,

let me summarize these cloud numbers,

• Microsoft Azure is clearly ahead in the revenue and is now No.1 Cloud company (based on the Cloud revenue). It clearly showcase the stronghold on Cloud IaaS, PaaS and SaaS service offerings on top of Azure intelligent cloud/edge giving the best Digital Transformation Platform to the corporate customers.
• Around 30% of revenue comes from Cloud for Microsoft. Clearly large segment compared to Amazon (around 12%) and Google (would be around 7% even if we assume 2 BUSD cloud revenue).
• AWS is 2nd with better revenue growth (but at lower base of last year) and it would be interesting to see next-Q comparison with AZURE
• Google does not publish separate GCP numbers but the segment which includes GCP itself is around 4-BUSD. So clearly they are not matching with Azure/AWS.

Microsoft has clearly taken over Amazon and Google based on their Intelligent Cloud (Azure) strategy and got the better response from shareholders because of better net profit margin and cloud strategy

All the 3-comapnies are very close to each other from Market capitalization perspective and it would be interesting to see from here how each one performs. There might be some changes in the numbers in short term, but It looks like the company who delivers the best cloud strategy would be the first cloud company to reach Trillion dollar cloud (and 2nd Tech company after Apple)

Hope you like the analysis and comparison ! I am not market expert but tried to do analysis based on my knowledge. comments /suggestions welcome !

Disclaimer : This Article is not sponsored by any company and purely my views based on the financial reports from each company. I have interest in Microsoft being its employee and holding stocks of Microsoft.