AWS Growth Surge Gives Amazon Edge Over Microsoft in AI Cloud Race

Both Amazon and Microsoft have built diversified, defensible business models that span software, hardware, and cloud services. Microsoft dominates productivity software and gaming, while Amazon leads e-commerce, yet each maintains a "rock-solid" cloud business. The critical shift highlighted in this analysis is AWS's dramatic acceleration in growth. For years, Microsoft's revenue expanded faster than Amazon's overall, but AWS's third-quarter performance—growing at 37% after years in the 20% range—has reversed that dynamic. This acceleration is framed as a response to the surge in AI infrastructure spending, suggesting AWS's jump reflects genuine demand rather than a temporary spike. The article argues that operating profit growth, not just revenue growth, matters most because it strips away noise from both companies' private AI investments (Microsoft in OpenAI, Amazon in Anthropic). By this metric, Amazon's lead "opens up" due to AWS's higher margins, making it the clear winner in growth trajectory. Valuation tells a mixed story: Microsoft trades at a lower operating profit multiple, which the analysis acknowledges is justified given Amazon's faster growth premium. On forward earnings, Amazon becomes the cheaper option once accounting for its profit growth advantage.