Microsoft is gaining ground on Amazon Web Services (AWS) in the cloud race. Currently AWS is the market share leader with AWS 29% market share versus Azures 22% and Google Cloud’s 12%.
But Microsoft and Google both posted stronger growth than AWS with Microsoft taking the lead wit 33% year-over-year growth in Azure revenue for the first quarter of 2025.
The surge is supported by strong demand for AI services including a large but undisclosed amount of AI processing dedicated to OpenAI and ChatGPT development. But what put Microsoft over the top was a wave of enterprise workload migrations from platforms like SAP, Oracle, and VMware.
Amy Hood, Microsoft’s chief financial officer, told investors on a conference call that the AI contribution to the cloud computing business was in line with the company’s expectations, while “the real outperformance in Azure this quarter was in our non-AI business.”
Azure’s 33% growth outpaced AWS’s 17% and Google Cloud’s 28% in the same quarter. According to Microsoft, AI services alone contributed 16 percentage points to Azure’s growth, up from 13 points the previous quarter. But analysts agree that migrations of large enterprise systems have also played a key role.
Organizations are increasingly choosing Azure to host legacy workloads, taking advantage of Microsoft’s tailored solutions for SAP and Oracle transitions and its Azure VMware Solution, which allows customers to move existing VMware environments with minimal change. These migrations have become a strategic pillar of Azure’s growth, particularly among enterprise clients modernizing their IT infrastructure.
Microsoft’s Intelligent Cloud division reported $26.8 billion in revenue for the quarter but AWS remained the market leader at $29.3 billion, albeit with a slower growth rate. Google Cloud followed at $12.3 billion.
To support continued expansion, Microsoft plans to invest $80 billion in AI and cloud infrastructure in 2025. “Microsoft Copilot, Azure, and our AI infrastructure are the platforms of choice to help every organization become more productive,” CEO Satya Nadella said during the company’s earnings call.
