It’s been an exciting quarter for the tech world as three of the biggest players, Microsoft, Alphabet, and Amazon, all surprised market watchers with stronger-than-expected earnings results. After a post-pandemic slump, these tech giants look to be bouncing back.

One common theme that emerged from their quarterly reports is the growing importance of cloud computing to businesses today. Cloud-based services are fast becoming the go-to solution for companies looking to stay competitive and streamline their operations. Indeed, all three companies attributed much of their growth to the continued rise of artificial intelligence applications, like ChatGPT, and the corresponding demand for cloud-based computing power.

With AI set to become even more ubiquitous in online life, Microsoft, Alphabet, and Amazon are all betting on this technology to fuel new growth for their cloud services and revenue for their companies.

Microsoft, Alphabet, and Amazon beat forecasts with strong Q1 earnings

All three tech giants surprised market watchers with stronger-than-expected quarterly results.

Microsoft exceeded expectations for its top and bottom lines, reporting revenue of $52.86 billion, surpassing analysts’ quarterly expectations of $51.02 billion. Net income was up 9% from a year ago to $18.3 billion, while revenue grew 7% year-over-year. Various segments of the company performed well during the quarter, with a 14% increase in revenue from commercial Office 365 productivity software subscriptions credited to growth in revenue per user.1

Alphabet Inc., the parent company of Google, reported better-than-expected first-quarter results off the back of strong search advertising performance. The company’s sales, not including partner payouts, were $58.07 billion, surpassing analysts’ average estimate of $56.98 billion. To maintain the company’s profit margins as advertisers reduce spending, Alphabet has been implementing cost-cutting measures. In January, the company reduced its headcount by approximately 12,000 employees. In addition, Alphabet has authorized share buybacks of up to $70 billion. So far this year, Alphabet’s stock has gained more than 17%.2 Inc. also showed a stronger-than-expected quarterly profit, attributing its success to cost-cutting measures and robust sales in its cloud-computing division. The company’s revenue was $127.4 billion, a 9.4% increase from the previous year and beating expectations of $124.7 billion. Operating income stood at $4.8 billion, surpassing the projected $3 billion set by analysts. Amazon has been taking steps to adjust to slowing sales growth in both online shopping and its Amazon Web Services division. These measures include reducing its headcount by approximately 27,000 jobs over the past year. Despite this, the company’s expenses increased at the slowest rate in a decade, demonstrating its continued resilience in the face of challenging economic conditions.3

What’s notable in these better-than-expected earnings reports was the contribution made by cloud services and AI technology for all three companies.

Clouds with silver linings

The importance of cloud computing to today’s businesses—providers and customers alike—was reinforced by the quarterly results of Microsoft, Alphabet, and Amazon.

Microsoft’s Intelligent Cloud business segment saw a revenue increase of 16%, landing at $22.08 billion for the quarter, beating estimates of $21.94 billion.4 Despite a challenging economic climate leading to many customers cutting back on spending, Microsoft’s cloud-based offerings, such as Azure and Office 365, continued attracting new customers. Sales from these commercial cloud products were up 22% to reach $28.5 billion. Microsoft also said it would increase its spending to reinforce its cloud data centers in response to the growing customer demand for new AI tools.5

Alphabet’s Google Cloud has likewise weathered recent economic uncertainty to turn a profit for the first time. While Alphabet’s cloud unit is far smaller than those of Microsoft and Amazon, it reported profits of $191 million in Q1, with Google indicating that as its core search advertising business matures, the company expects growth from its cloud offerings.6

Amazon Web Services, AWS, a key profit center for Amazon since 2014, also offered stronger-than-expected performance in the first quarter. The cloud unit saw revenue growth of 16% in Q1, with AWS bringing in $21.35 billion, accounting for nearly 17% of Amazon’s overall revenue for the quarter. While facing increased competition from companies like Alibaba, Alphabet, and Microsoft, Amazon still maintains a sizeable lead in the global cloud infrastructure market.7

AI pointing the way to future revenue growth

A big part of the growth of cloud during this past quarter was the continuing transformation of the economy by the rise of artificial intelligence applications like ChatGPT and the demands for cloud-based computing power by such programs. As AI integrates into more and more aspects of online life, Microsoft, Alphabet, and Amazon have all indicated that AI is a path to new growth for their cloud services.

Microsoft, for example, has unveiled a number of AI-based products and features in recent months as part of a strategy to boost sales of Azure, search ads and office-productivity programs. One such move was integrating OpenAI’s technology into Microsoft’s search engine Bing, providing new AI chatbot functionality to its internet search. Microsoft’s More Personal Computing segment, which includes its Bing search engine, generated $13.26 billion in revenue in Q1, surpassing consensus estimates of $12.25 billion. The newly AI-enhanced Bing now has over 100 million daily active users for the first time.8

Amazon’s AWS, on the other hand, is pursuing a strategy of targeting corporate customers. AWS intends to be a “neutral platform” for businesses that want to incorporate generative AI into products without being tied to a single provider. As a result, AWS is selling access to a variety of large language models, including ones by Anthropic, Stability AI, and AI21 Labs. AWS also has its own language model, Titan, which be trained on a customer’s data to write targeted blogs and emails while avoiding any concerns about the sharing or mingling of private data in the training of public models.9

And Google, whose business faces the most potential for disruption by AI-powered chatbot web search, is also keen to incorporate AI into its offerings. Google has recently begun selling access to its largest AI program, the Pathways Language Model, for use by developers using the company’s cloud services. Already, Anthropic, a rival company to OpenAI, has made Google’s cloud its preferred service provider, agreeing to a multiyear cloud deal worth $900 million.10

Investing in six technology giants in one investment solution

Big tech companies have transformed our world, serving as significant drivers of growth and return for our markets. Currently, high share prices may deter investors from adding all of these companies individually to a portfolio. With the Evolve FANGMA Index ETF (TECH ETF) investors get exposure to all six technology giants – Facebook (Meta), Amazon, Netflix, Google, Microsoft, and Apple – for a reasonable unit price. For more information on TECH ETF, visit the fund page here:

To stay updated with insights on investing and industry updates on related investment products, sign up for our weekly newsletter here.



  1. Bass, D., “Microsoft Profit, Sales Top Estimates on Strong Cloud Demand,” Bloomberg, April 25, 2023;
  2. Love, J., “Alphabet Shares Rise on Revenue Beat as Ad Sales Recover,” Bloomberg, April 25, 2023;
  3. Palmer, A., “Amazon stock dips as uncertain cloud outlook overshadows revenue beat,” CNBC, April 27, 2023;
  4. Novet, J., “Microsoft reports earnings beat, says A.I. will drive revenue growth,” CNBC, April 25, 2023;
  5. Bass, D., “Microsoft Profit, Sales Top Estimates on Strong Cloud Demand,” Bloomberg, April 25, 2023;
  6. Love, J., “Alphabet Shares Rise on Revenue Beat as Ad Sales Recover,” Bloomberg, April 25, 2023;
  7. Novet, J., “Amazon’s 18% cloud revenue growth impresses even as margin narrows,” CNBC, April 27, 2023;
  8. Novet, J., “Microsoft reports earnings beat, says A.I. will drive revenue growth,” CNBC, April 25, 2023;
  9. Dotan, T. & Kruppa, “Microsoft, Google, Amazon Look to Generative AI to Lift Cloud Businesses,” The Wall Street Journal, March 27, 2023;
  10. Ibid


The contents of this blog are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed. These contents are not an offer or solicitation of an offer or a recommendation to buy or sell any securities or financial instrument, nor shall it be deemed to provide investment, tax or accounting advice. The information contained herein is intended for informational purposes only.
Commissions, management fees and expenses all may be associated with exchange traded funds (ETFs) and mutual funds (funds). Please read the prospectus before investing. ETFs and mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. There are risks involved with investing in ETFs and mutual funds. Please read the prospectus for a complete description of risks relevant to ETFs and mutual funds. Investors may incur customary brokerage commissions in buying or selling ETF and mutual fund units.
Certain statements contained in this blog may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Evolve Funds undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.

Tags AI  alphabet  Amazon  ChatGPT  cloud  earnings  generative ai  Microsoft  OpenAI  TECH ETF  technology