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Amazon's Cloud Growth Lags Behind Tech Giants, Shares Plummet
1 Aug
Summary
- AWS revenue up 17.5%, lagging Microsoft Azure's 39% and Google Cloud's 32% growth
- Amazon's cloud profit margin contracts, contrasting rivals' robust gains
- Investors closely watching AI-driven cloud computing race
On August 1, 2025, Amazon.com's (AMZN) shares dropped nearly 8% before the market open, as the company's cloud computing unit, Amazon Web Services (AWS), failed to impress investors with its growth. This contrasts with the robust gains reported by Amazon's AI-focused rivals, Alphabet (Google) and Microsoft.
AWS, which typically accounts for around 60% of Amazon's overall operating income, saw a 17.5% increase in revenue during the second quarter of 2025. However, this pales in comparison to the 39% jump in sales for Microsoft's Azure and the 32% gain for Google Cloud. Additionally, the profit margin of Amazon's cloud division also contracted.
The tech industry has faced intense scrutiny from investors over the estimated $330 billion AI spend this year, with Microsoft on track to potentially outspend its rivals over the next year. This has heightened the focus on the cloud computing race, where Amazon has struggled to keep pace with its competitors.
Despite the challenges in its cloud business, Amazon's core retail operations have largely remained shielded from the impact of U.S. President Donald Trump's tariffs, which have forced many retailers and consumer goods firms to seek ways to protect their margins without dampening demand.
