With Alibaba's belated report, the Q1 scorecards for all four global cloud hyperscalers are now in.
The Global Cloud Leader Remains Amazon's AWS:
Q1 revenue was $18.44B, up 37% year over year. Operating income was $6.52B, up 57% year over year. Operating margin was 35%, a new record.
AWS Q1 revenue represented 16% of Amazon's total revenue but contributed 178% of Amazon's operating income.
The Global Cloud #2 Remains Microsoft's Azure:
Q1 revenue was $11.37B, up 46% year over year, still the fastest growth among the four global clouds.
The Intelligent Cloud segment (Server + Azure + Enterprise Services) generated $8.28B in operating income, up 29% year over year, at a 43% operating margin.
Intelligent Cloud Q1 revenue accounted for 39% of Microsoft's total revenue and contributed 41% of Microsoft's operating income.
Azure became Microsoft's largest individual segment for the first time.
The Global Cloud #3 Remains Google Cloud:
Q1 revenue was $5.82B, up 44% year over year, the second-fastest growth among the four. Operating loss was $930M, a 16% operating loss rate. The company said it is prioritizing scale over near-term profitability.
Google Cloud's strategy focuses on large enterprises, with differentiation in Cybersecurity, Data Cloud, and Cloud Edge.
Capex this year remains focused on Cloud and AI. Q1 headcount growth was highest in the Cloud organization.
The Global Cloud #4 Remains Alibaba Cloud:
Q1 revenue was RMB 19.0B ($2.99B), up 13% (17% in constant currency), declining sequentially for the second consecutive quarter. Growth was the slowest among the four global clouds and the only one with a sequential decline.
Q1 EBITA profit was RMB 930M, EBITA margin 1.5%, profitable for the fifth consecutive quarter (EBITA basis).
Rising Star: DigitalOcean, the 'People's AWS':
Q1 revenue was $127M, up 36% year over year. Operating loss margin 10%. Monthly ARPU $69, up 27% year over year.
Q1 EBITDA profit was $38.5M, EBITDA margin 30%.
DigitalOcean's standout feature is a very low sales expense ratio of just 15%, consistently below R&D and G&A ratios.
Summary:
Overall, the global cloud Big 3 maintained steady execution, sustaining sequential growth at high bases.
On profitability, AWS set an industry benchmark with a 35% operating margin. Alibaba Cloud's first full-year profit also boosted confidence in China's cloud industry.
Cloud Capex remains at historical highs. FAAMG Q1 average Capex grew 27.8% year over year, primarily directed at servers for AI/ML workloads. We believe sustained cloud prosperity is the most critical driver of the data center semiconductor boom.
Global Top Four Cloud Vendor Characteristics:
Amazon AWS: Marketplace Sustains Numerous U.S. SaaS Companies
Microsoft Azure: Integrated IaaS + PaaS + SaaS. Google Cloud: Clear AI/ML Advantage, TensorFlow + TPU Software-Hardware Ecosystem.