The U.S. public cloud giants, Amazon, Microsoft, and Google, all reported their quarterly earnings this week. The key takeaway is the acceleration of digital transformation amid the global pandemic. As Microsoft CEO Satya Nadella said, "We've seen two years' worth of digital transformation in two months." Needless to say, cutting-edge cloud infrastructure is the cornerstone of their success. We highlight the growth of their cloud business, new products & deal wins, and Capex plans below.

Business Momentum

• AWS revenue topped $10.2 billion, with stable growth of 33% YoY. The operating margin of AWS increased to 30% due to a change in depreciation accounting. 

• Microsoft's Intelligent Cloud grew 27% YoY during the quarter, driven by a strong Azure (61% YoY). Azure powers 75 million DAU for Microsoft Teams.

• Google Cloud also grew by 52% YoY (with GCP's growth meaningfully higher). G Suite now has 6 million paying customers and Google Meet surpassed 100 million daily meeting participants.

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New Products and Deal Wins

By our observation, AWS has been rolling out more functions but won less large enterprise deals. Microsoft continued to expand its 5G capabilities with the rollout of Azure Edge Zone and the acquisition of Affirmed Networks. Microsoft also inked more high profile large enterprise deals. Function-wise, the bright spot from Google is Anthos' support for multi-cloud. 

• New Functions

  • AWS: Amazon Detective, Amazon Keyspaces, Amazon App Flow

  • Azure: Azure Edge Zone

  • GCP: Anthos (multi-cloud)

• Deal Wins

  • AWS: NFL

  • Azure: Coca-Cola (5-year), BlackRock, NBA

  • GCP: Loblaws, Wayfair, Vodafone

Cloud Capex & Investments

• Amazon’s Capex, including property acquired under capital lease, increased 50% YoY to $8.9 billion in Q1' 20.

• After a period of slow investment in data centers, Microsoft's Capex increased 47% YoY last quarter. The management also expect a healthy Capex next quarter as server supply constraints are eased.

• Google expects a modest decrease of Capex YoY, the most reduction of which comes from construction.

• Facebook saw a similar decrease in construction efforts due to shelter-in-place.

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