Chart of the Day: Cloud Kings

The battle for the cloud is under way and the two juggernauts, Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O), in the space are expected to see their cloud year-over-year (YoY) revenues grow by double digits through 2021. Microsoft reported after the close on Oct. 23. Its Azure business increased 59% from the prior year, with Intelligent Cloud business segment revenue coming in 4.1% above estimates at $10.85 billion.

Speaking about the cloud’s growth, Satya Nadella, Microsoft Corporation – CEO & Director, said, “Every Fortune 500 customer today is on a cloud migration journey, and we are making it faster and easier.” He went on to say, “The quintessential characteristic of every application going forward will be AI, and we have the most comprehensive portfolio of AI tools, infrastructure and services. Azure AI now has more than 20,000 customers, and more than 85% of the Fortune 100 companies are using Azure AI in the last 12 months.”

Amazon is expected to report after the close today, Oct. 24. Analysts expect AWS revenue to increase 36.4% to $9.11 billion from the prior year. Amazon has a significant Predicted Surprise of 4.98%. StarMine’s SmartEstimates® of $4.85 per share vs. the $4.62 per share mean estimate indicates that Amazon is likely to beat EPS expectations.

SmartEstimates® aim to provide earnings forecasts that are more accurate than I/B/E/S Consensus Estimates, by putting more weight on the recent forecasts of top-rated analysts. When SmartEstimates® diverge significantly from Consensus, you can anticipate the occurrence of earnings surprises with an accuracy rate of 70%. Revenue SmartEstimates® are even more predictive of surprises, with a historical accuracy rate of 78%.