Azure Growth Drives Microsoft's Cloud Expansion

Microsoft's cloud business has been growing rapidly, with Azure revenue increasing by 47% year-over-year in 2022.

This growth is a significant contributor to Microsoft's overall revenue, with Azure now accounting for a substantial portion of the company's income.

Microsoft's acquisition of LinkedIn in 2016 marked a significant turning point in the company's cloud strategy, enabling Azure to tap into LinkedIn's vast network of users and businesses.

As a result, Azure has become a key driver of Microsoft's growth, with its revenue expected to continue expanding in the coming years.

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Microsoft's Azure has made significant strides in cloud hosting, with over 450,000 websites hosted on its platform.

In fact, according to BuiltWith, over 857k live websites use Microsoft Azure's cloud hosting services. This is a notable improvement compared to its usage share among the top one million websites on the internet, which is at 1.83%.

Microsoft Azure is a clear fourth place for cloud hosting providers, after Amazon, Cloudflare, and Google Cloud, among the top 10k sites on the web.

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Among the top sites in the world, Microsoft has strong enterprise connections and has used them to land the likes of Sears, Starbucks, Volvo, and Jeep as hosting clients.

Microsoft Azure's revenue growth has been impressive, with its IaaS and PaaS products growing sales revenue 27% to $12.3 billion in Microsoft's Q3 2020.

Microsoft's commercial cloud officially hit the $50 billion mark for its annual run rate in 2020, marking an impressive revenue milestone.

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Microsoft's Azure is a significant player in the cloud market, accounting for nearly 60% of the company's total revenue. This makes it a crucial segment for Microsoft's growth.

Azure ranks second globally in market share, behind Amazon Web Services (AWS) and followed by Google Cloud. Investors view this segment as central to Microsoft's competitiveness.

In the fourth quarter of the fiscal year 2024, Azure and other cloud services reported revenue of $28.51 billion, an increase of 19% year-on-year. However, this growth fell short of analysts' expectations, with a pace that slowed from the low-to-mid 30% range seen in previous quarters.

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Revenue for the Intelligent Cloud segment is expected to reach $26.8 billion in the September quarter, up 10% from a year earlier. This indicates a further slowdown in growth.

Microsoft is expected to report earnings per share of $3.1 on overall revenue of $64.57 billion, reflecting annual growth of 3.7% and 14% respectively. This suggests a slight slowdown in overall revenue growth, down from 15% in the July quarter.

Azure's growth has been impressive, with the platform offering SaaS, PaaS, and IaaS services, and using existing B2B connections to fuel aggressive growth.

Here are some key statistics on Microsoft Azure's revenue growth:

Azure's future looks bright, with growth numbers that are truly staggering. The company's commercial cloud and Azure have reported some incredible growth numbers over the past quarters, with Azure revenue growth numbers for the past 10 quarters ranging from +98% to +59%.

Microsoft has secured several high-profile deals, including a 10 billion dollar contract from the Pentagon and a significant deal with the NBA to use Azure and Surface tablets. These partnerships demonstrate the company's ability to land significant enterprise deals.

The average number of cloud services used by enterprises has increased by 3.9% from the previous year, indicating that there's still room for Azure and other competitors to sell cloud services beyond basic web hosting.

Here are some key statistics on Azure's growth rates:

These growth rates are impressive, and it's clear that Azure is well-positioned to continue its upward trajectory.

Microsoft's Azure has been on a tear, with growth numbers that are simply staggering. The commercial cloud, which includes Azure, has reported some impressive numbers over the past quarters, with Azure revenue growth ranging from +98% to +59% over the past 10 quarters.

In fact, Azure's growth rate has been so impressive that it's hard to keep track. Here are the official Azure revenue growth numbers for the past 10 quarters:

But Azure's growth isn't just limited to its revenue numbers. The company has also landed some major deals, including a 10 billion dollar contract from the Pentagon to provide cloud computing services and consulting, and a significant deal with the NBA to use Azure and Surface tablets to provide NBA fans with unique customer experiences.

Microsoft's existing relationships with companies through its OS and productivity software also give it a strong platform to land more deals in the future. With enterprises using an average of 1,295 different cloud services in 2019, there's still room for Azure and other competitors to sell cloud services beyond basic web hosting.

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Amazon has a significant lead in the cloud market share, with 27.9% of the market in 2019, even when including non-Azure Microsoft products.

In April 2020, AWS maintained a 5.8% market share in web hosting, making it the second-largest hosting provider in the world.

AWS used its early lead to establish a leading market share in most IaaS categories.

Azure is slowly playing catch up, but it's worth noting that AWS is the second-largest cloud hosting provider among the world's top websites at 25%.

Amazon's strong presence in the cloud market is evident, with a clear lead over Azure in terms of market share and usage distribution.

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As a platform company, Microsoft is focused on meeting the mission-critical needs of its customers across its at-scale platforms today, while also ensuring it leads the AI era.

Microsoft is facing capacity challenges, which is driving the company to increase investment in data centre infrastructure to meet the fast-growing demand for AI training.

The company has already seen a significant surge in capital expenditure, jumping to $19 billion in the June quarter from $16 billion in the March quarter.

This investment is a clear indication that Microsoft is committed to staying ahead in the AI race, and it's willing to put in the resources to make it happen.

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