No. 1 Amazon: Rebound
AWS Q2 revenue up 37% year over year, growth accelerating for a second straight quarter, but operating margin fell to 28%, drawing criticism from the Street.
No. 2 Microsoft: Steady
Azure Q2 revenue up 51% year over year, the third straight quarter above 50%. Azure now accounts for 18% of Microsoft's total revenue, within $2B of the largest segment, Office. We remain bullish that Azure could overtake AWS by 2024.
No. 3 Google: Taking Off
Google's stock has vastly outperformed the FAAMG core this year. Q2 earnings showed advertising recovering above expectations, YouTube revenue approaching streaming leader Netflix. Moreover, Google Cloud Q2 revenue surged 54% year over year, unprecedentedly leading the four global cloud giants.
No. 4 Alibaba: Falling Behind
Alibaba Cloud Q2 revenue up 29% year over year; given the low base, this missed expectations. The main reason was losing the TikTok mega-deal, plus Huawei Cloud's aggressive expansion intensifying domestic competition, so Tencent Cloud's results won't look good either. Notably, Alibaba Cloud included DingTalk for the first time in Q2, giving it a Google Cloud flavor.