GOOG and MSFT clocking in strong cloud numbers

Both Alphabet and Microsoft reported today.

A look into their numbers shows that cloud spending is up YoY, which should benefit next week’s SaaS stocks.


Google’s cloud business was a standout in the quarter, growing 44% and beating estimates as more big enterprises shift their workloads away from their own data centers.


Third-quarter Azure annual growth of 46.0% was steady from the previous quarter and in line with estimates of 45.6% growth compiled by Visible Alpha.

and then this nugget was revealed in the MSFT call:

Iversen said that Azure Microsoft had better-than-expected growth in long-term Azure contracts, although he did not provide specific numbers.

“These numbers show that customers continue to turn to Microsoft as they accelerate their shift to cloud computing and the current unsettling economic environment has not yet impacted the company’s main growth driver,” said Haris Anwar, senior analyst at


I agree about the sentiment and positive signals this provides for software infrastructure companies. I paid more attention to the Microsoft earnings call. Here are a few other nuggets about Azure that I jotted down during the call (need to verify from transcript but directionally relevant):

  • Helped more customers than ever this quarter (implies strong new customer growth)
  • The number $100M deals doubled year/year
  • CosmosDB usage increased over 100% for the third quarter in a row. This is relevant as it is a proxy for transactional database usage and represents Microsoft’s equivalent to MongoDB.
  • Synapse usage doubled as well. Synapse is Microsoft’s analytics suite, which includes a data warehouse. Strong utilization here would imply other analytics products, like SNOW, likely experienced elevated demand.
  • Related, Azure ML experienced an 86% increase in usage.
  • New long-term Azure customer contracts had better than expected growth.

I highly recommend that all tech investors and listen to the Microsoft call in particular.

It is a master course in where things are at in tech, and management are pretty good at sharing their thoughts on where things are at. They’re not into worrying about macro (as

Satya Nadella said somethings like:

“Don’t hear of businesses looking to IT budgets… for cuts. If anything, will accelerate. Have not seen this level of demand to … improve productivity”.

“Tech spend going to double by end of decade”

“In an inflationary world, the only deflationary force is software”

Amy Hood - “Still early. Digital transformation. Automation…”

All of this seems to suggest that the longer-term environment for tech stocks is strong.…



Just following up from the transcript:…

Analyst: “Yes. Thank you very much. Satya handful of infrastructure software companies have commented that their consumption activity actually started to slow a few months ago. And so, I’m curious what in your view is allowing your Azure trajectory to show better resilience. And do you in fact, see some of the newer products kicking in such as Azure or Synapse Cognitive Services, OpenAI and perhaps contributing to the strength and health and resiliency of that Azure number?”

Satya Nadella: "The second thing is in the conversations we are having with our customers. The interesting thing I find from perhaps even past challenges whether macro or micro is no, I don’t hear of businesses looking to their IT budgets or digital transformation projects is the place for cuts, if anything, some of these projects are the way they’re going to accelerate their transformation or for that matter automation for example. I have not seen this level of demand for automation technology to improve productivity because in an inflationary environment, the only deflationary force is software. So that’s the second micro thing the tone thing that’s different.

At the end of the day though, I mean, none of us here are trying to forecast macro. So all we think of is the TAMs that we are competing in a large, as a percentage of GDP tech spend is on a secular basis by the end of the decade going to double. We just want to keep driving usage, driving share and be competitive, so that’s kind of how we view what we are doing. And that’s where our confidence comes from in terms of our outlays, whether it’s OpEx or CapEx".

Amy Hood -
“I think the only thing Satya, I might add is, I think always and I think we’ve used this language quite frequently focused on the long–term opportunity. You talked about it as the TAM that we’re focused on. I would say also, there’s still a lot of that TAM left to go – left to go after and it is quite early, still. And the transitions you’re talking about from a digital transformation perspective, from an automation perspective, from a type of value and real productivity enhancements that can be made. And so I think the continuity of the execution has certainly been very good from the sales and partner side. But I would also say to your point, we’re investing for a long-term opportunity and our confidence that that long-term outcome is right is where the – is I think the basis for where you and I are talking, giving this answer from”.

This comment by Satya is relevant to my AI post I wrote a little while ago:

“The other one is, this is sort of age of AI. In other words, the core business logic is not being written. It’s being written by software. So when I look at, when I use get up co-pilot, that’s the therein lies the future of what how all business logic gets written. And so to me the AI layer, both the training, supercomputers, as well as the inference layer that’s a place where you’ll see us integrate what today you all consider to be two different businesses, whether it’s Azure and Windows, they’re just one business to me, because to me, where in training happens, where inference happens will be written once by developers”.

but definitely listen to the whole thing.