Shares soared at Microsoft and Amazon in after-hours trading last night after both firms announced strong cloud growth in their latest quarters.
Sales at Amazon's cloud arm Amazon Web Services (AWS) rose 78 per cent annually to $2.1bn (£1.4bn) for the three months to 30 September, while operating income rocketed a massive 432 per cent to $521m – including a $78m impact from favourable foreign exchange.
Amazon's share price rose up to 11 per cent in after-hours trading on the back of the results announcement.
Amazon's director of investor relations Phil Hardin said the strong growth at AWS in Q1 may not be consistent.
"This is a young and rapidly growing business, and as you've seen looking backwards, certainly growth rates and margins and capital expenditure timing can be bumpy," he said. "We're taking a very long-term view on this business.
"We are excited about the potential there, and really the team are focused on just keeping their heads down and continuing to accelerate the pace of innovation to try to continue to grow the functionality gap we think we offer. So a lot of hard work is going on there. But again, we're taking a long-term view on the business and interested in helping customers as much as possible in that space."
Cloud was also the star performer for Microsoft in its Q1, which also ended 30 September.
Its Intelligent Cloud arm – home to Azure, enterprise services and server products – was the only of its three divisions to grow annually, with sales up eight per cent to $5.9bn.
Its Productivity and Business Processes section slumped three per cent annually to $6.3bn while its More Personal Computing arm saw sales fall 17 per cent annually to $9.4bn over the same period.
Microsoft chief executive Satya Nadella said commercial cloud is booming.
"We are making great progress towards our goal of $20bn in annualised commercial cloud revenue run rate, which now exceeds $8.2bn. The results speak to our differentiated cloud strategy, expanded market opportunity and the speed at which customers are adopting our service."
In after-hours trading, Microsoft shares spiked last night by more than eight per cent.
Overall at Microsoft, GAAP net profit as reported grew two per cent annually in Q1 to $4.62bn on sales which over the same period fell 12 per cent to $20.4bn.
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