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However, in the long term, the firm sees the “pendulum swinging toward MSFT, given an early AI lead and large-enterprise focus.”
“Last qtr MSFT noted FQ1 (Sept.) is when Azure starts to lap optimization headwinds,” wrote analysts.
“While encouraging for cloud, we view MSFT as best positioned for a few key reasons: 1) broad portfolio across productivity, cyber, cloud, etc. presents compelling offset/room to negotiate in consolidation-focused IT backdrop; 2) gaining share from traditional industries — slower to move, but bring significant scale + MSFT IT bias; 3) early AI leadership — brings incremental interest to Azure.”
Analysts noted that Amazon Web Services (AWS) growth will likely accelerate in August due to lapping 2022 customer spend rationalization.
“We are tactically positive on the AWS business given 2H re-acceleration potential, but see mkt share trend vs. Azure obscuring longer-term optimism,” added analysts. “Biggest overhang appears to be lack of execution around AI / LLM opportunity—we believe AWS capabilities similar to Azure but product not being bundled/productized to make easy purchase for CTOs.”
