Amazon Hits Record Profit Margin as AWS Growth Outpaces Microsoft AI Surge

TL;DR: Amazon posted a 16.7% net profit margin—the highest ever—while AWS revenue jumped 28% year over year, narrowing the gap with Microsoft’s AI‑driven growth.

Context Amazon (AMZN) and Microsoft (MSFT) released earnings on April 29, sparking divergent market reactions. Amazon’s shares rose, Microsoft’s fell, and the two firms now sit on opposite sides of a year‑to‑date performance split: Amazon up about 20%, Microsoft down more than 10%.

Key Facts - Amazon’s net profit margin reached 16.7% in the quarter, a record for the company. Microsoft’s margin stayed near 38%, but Amazon’s margin growth is unprecedented. - AWS, Amazon’s cloud arm, posted revenue growth of 28% versus the same period last year, continuing an acceleration trend that saw 13% growth in 2023, 19% in 2024, and 20% in the most recent year. - Microsoft’s AI business now runs at a $37 billion annual revenue run rate, a 123% increase year over year, while its overall cloud revenue grew 29% in the fiscal Q3 ending March 31. - Amazon’s advertising segment grew 24% YoY and its AI chip business hit a $20 billion annual run rate, together accounting for roughly 30% of total revenue. - Total revenue for the quarter was $181.5 billion for Amazon and $82.9 billion for Microsoft; Microsoft’s net income slightly exceeded Amazon’s, but the margin gap is shrinking.

What It Means Amazon’s record margin signals that high‑margin segments—cloud, advertising, and AI chips—are beginning to outweigh the low‑margin e‑commerce logistics that have historically held the company back. The 28% AWS growth outpaces Microsoft’s cloud expansion, even as Microsoft leverages AI to double its AI revenue in a year. Investors may view Amazon’s diversified high‑growth portfolio as a more resilient engine for future earnings, while Microsoft’s AI surge keeps it in contention for leadership in next‑generation services.

Looking Ahead Watch the next earnings season for signs of whether Amazon can sustain its margin expansion and whether Microsoft’s AI revenue can translate into broader profitability across its cloud and productivity suites.