Amazon vs. Microsoft: Which Cloud Empire Is the Better Buy Now?
2026-07-23 23:15
•Keithen Drury •The Motley Fool
••• •• Axe Capital view
Microsoft Leads the Cloud Race for Now
Between Amazon and Microsoft, the latter offers better cloud growth at a more reasonable price.
Amazon’s AWS has been a powerhouse, responsible for over half its operating profit and backed by massive data center investments. Yet, its share price values it richly compared to Microsoft. Microsoft’s Azure is growing faster—around 40% versus AWS’s 28%—and the stock trades at a lower multiple, about 20.5 times next year’s earnings, under the S&P 500 average. For investors watching the JSE, the direct tech exposure is limited, but the USD/ZAR rate could respond to broader tech trends as it often reflects global risk appetite. Given South Africa’s tech adoption lag, the impact is indirect but noticeable in risk-sensitive currencies like the rand. Microsoft’s diversified business model and cheaper valuation make it a cleaner buy than Amazon right now. Still, should AWS accelerate faster or Amazon execute some new growth driver, the picture could shift swiftly. this is just my opinion and not financial advice
Trim Amazon exposure if you hold it and add Microsoft selectively on dips, watching USD/ZAR for tech sentiment shifts.
- MSFT
- USD/ZAR
- AWS outpaces Azure growth unexpectedly
- Rand weakens sharply, disrupting dollar-based tech sentiments
6/10
Amazon and Microsoft are compared as cloud computing investments. Both companies show similar financial performance with comparable growth rates and core business strength. However, Microsoft emerges as the better buy due to its lower valuation of 20.5x forward earnings compared to Amazon, trading below the S&P 500 average despite comparable financial metrics.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Keithen Drury
Categories: Equities, Earnings, Financials
Tickers: AMZN, MSFT
Sentiment: Positive - Amazon demonstrates strong fundamentals with AWS generating 59% of operating profits and $200 billion in data center investments. However, it trades at a higher valuation than Microsoft despite similar growth metrics, making it less attractive at current prices. Microsoft is recommended as the better buy due to its attractive valuation of 20.5x forward earnings, which is below the S&P 500 average of 21.5x. Azure is growing faster at 40% compared to AWS's 28%, and the company shows comparable financial performance to Amazon at a lower price point.
Keywords: cloud computing, AWS, Azure, valuation, growth rate, operating cash flow, hyperscalers
Insights:
- AMZN: Neutral: Amazon demonstrates strong fundamentals with AWS generating 59% of operating profits and $200 billion in data center investments. However, it trades at a higher valuation than Microsoft despite similar growth metrics, making it less attractive at current prices.
- MSFT: Positive: Microsoft is recommended as the better buy due to its attractive valuation of 20.5x forward earnings, which is below the S&P 500 average of 21.5x. Azure is growing faster at 40% compared to AWS's 28%, and the company shows comparable financial performance to Amazon at a lower price point.
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