Amazon and Microsoft Capitalize on AI Growth
Amazon’s third-quarter sales reached $180.2 billion, marking a 13% year-over-year increase, with its cloud division, Amazon Web Services (AWS), contributing $33 billion—a 20.2% growth. AWS remains the primary profit engine, generating an operating income of $11.4 billion, which constitutes 66% of Amazon’s total operating income.
Microsoft reported a revenue of $77.7 billion for the first quarter of fiscal 2026, an 18% increase compared to the previous year, while operating income climbed 24% to $38 billion. Its Azure cloud services saw a 40% revenue growth year-over-year. Both companies are making substantial investments in AI infrastructure, with Amazon’s capital expenditures reaching $50.9 billion in the past year and Microsoft at $34.9 billion in fiscal Q1 alone.
As both tech giants embed AI capabilities into their existing services, their respective forward price-to-earnings ratios stand at 29 and 30, indicating growth potential but also presenting risk to investors considering the high valuations and significant capital outlays.
