Alphabet delivered the strongest cloud results, but analysts see stronger upside in Microsoft and Amazon stocks.
- Google Cloud revenue rose a whopping 48% in the December quarter, as its Gemini 3 AI drew business.
- Sales at Microsoft Azure and Amazon Web Services also beat consensus expectations, but the size of the beat failed to impress investors.
- While Google’s strength has been well documented, the significant rally in the stock in recent months seems to have left little scope for upside in the near term, analyst stock projections show.
Amazon, Microsoft, and Alphabet reported cloud unit performance above Wall Street’s expectations, showing that AI investments are turning into revenue gains.
However, granular details such as growth pace, AI roadmap, market positioning, and capital spending scale have driven investor sentiment.
With valuations having risen considerably over the past few years, the investment calculus for Big Tech stocks has grown more complicated. Here’s a Stocktwits breakdown of how to view last week’s cloud results, both in isolation and in the broader context.
Google Shines
Sales at Alphabet’s Google Cloud, the smallest of three, grew 48% to $17.7 billion, its quickest pace in four years and significantly higher than estimates of $16.2 billion.
That dwarfed Amazon Web Services’ 24% growth (22% expectation) and Microsoft Azure’s 39% growth (38.8% expectation). Although ahead of targets, the size of the beat failed to impress investors, triggering a post-earnings selloff in Amazon and Microsoft stocks.
Google showed that its Gemini 3 model, launched in November, has moved beyond accolades to drive real business. Last month, it landed one of its biggest deals yet: a cloud partnership with Apple to power the iPhone maker’s AI offerings using Gemini models.
In the competitive landscape, Amazon is seen at a disadvantage due to its lack of in-house AI operations or a significant AI partnership like Microsoft's with OpenAI.
DA Davidson downgraded Amazon to ‘Neutral’ from ‘Buy’ following the results. The research firm said it sees AWS continuing to lose its lead against competitors and now "scrambling to catch up through escalating investment.” Stifel downgraded Microsoft stock to ‘Hold’ from ‘Buy.’
How Do They Differ?
To be sure, AWS is the largest in size and scale – twice the size of Google Cloud – with deep penetration in startups, internet companies, and enterprise consumer segments.
Azure is the strongest with large enterprises, thanks to its tight integration with Windows, Office, and other Microsoft Office tools. Google Cloud is recognized for its strength in data analytics and AI and is increasingly gaining traction as enterprises adopt Google enterprise software.
MSFT vs AMZN vs GOOGL On Stock Fundamentals
From a stock analysis perspective, Microsoft has the most analyst buy recommendations and the highest target upside, and the lowest forward 12-month price-to-earnings ratio. (see chart).
| Forward P/E< | Buy Calls (% of all analyst calls)< | 12-Month Upside Forecast< | |
| Amazon | 27.5 | 94% | 35.40% |
| Microsoft | 22.9 | 96.40% | 50% |
| Alphabet | 28.2 | 88% | 14% |
Even as Alphabet delivered strong results, its upside projection is the weakest; GOOGL rallied about 65% over the past six months. The company also said it would double capital expenditures this year, marking the largest increase among Big Tech peers.
Retail sentiment paints a unique picture. Stocktwits sentiment for Amazon and Alphabet climbed over the past week and was ‘extremely bullish’ as of the last reading, while the sentiment for Microsoft dipped to the ‘bullish’ zone.
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