Wall Street analysts who follow tech and cloud computing were all but popping Champagne on July 30.
Microsoft had reported stellar financial results and strong growth that could be connected to artificial intelligence. After the market closed, extended-hours trading shot Microsoft’s share price up by as much as 9%. The next day, Microsoft was briefly valued at $4 trillion. (Then, as all good celebrations do, the rally took a breather on Friday as Microsoft’s share price fell by almost 2%, before gaining more than 4% by midday Monday.)
For Microsoft CEO Satya Nadella and Chief Financial Officer Amy Hood, during a call with analysts, almost every question began with some sort of congratulations.
“I’ve been covering Microsoft for a while and I don’t think I’ve ever seen a quarter where everything came together this well,” said Keith Weiss, an analyst with Morgan Stanley, who asked the first question on the call with Microsoft brass. “Congratulations on that execution.”
Then on Thursday, when Amazon CEO Andy Jassy and Chief Financial Officer Brian Olsavsky answered questions from analysts, the mood chilled.
Amazon’s cloud computing division, Amazon Web Services, reported revenue that beat estimates, but Wall Street was underwhelmed by the growth. The company’s share price fell by more than 8% on Friday and were off 1% on Monday.
“There is a Wall Street finance person narrative right now that AWS is falling behind in (generative AI) with concerns about (market) share loss,” Morgan Stanley analyst Brian Nowak said during the call. “Can you address that and what is your rebuttal to that?”
Nowak also acknowledged AWS is a big business—it’s the largest cloud-computing provider in the world—but asked if there’s any reason to assume its growth would accelerate in the back half of the year.
That followed a question from Doug Anmuth, an analyst with JPMorgan, who said, “we’re seeing significantly faster cloud growth among the No. 2 and 3 players in the space,” and asked if Amazon believed that was due more to customer demand or infrastructure supply.
Jassy defended the company’s cloud growth by saying growth rates are a function of the base—that it’s harder to show growth when…
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