General Industry Update

AI continues to be the big story in cloud computing, driving innovation, collaboration, and earnings in the sector.

In April, McKinsey announced a partnership with Google Cloud to leverage generative AI, enhancing their ability to drive significant, innovative change for clients through Gemini for Google Cloud. This partnership is a cornerstone of McKinsey’s broader gen AI ecosystem, aimed at providing clients with comprehensive expertise and solutions for adopting and scaling AI across various technology stacks. McKinsey brings substantial resources to the alliance, including a team of 7,000 technologists in over 50 countries, many of whom are Google Cloud-certified.

Google Cloud is recognized for its industry-leading cloud and AI technologies, deeply integrated into its operations since its inception. The collaboration taps into Google’s extensive product and engineering expertise, foundational models, and AI frameworks, enabling large-scale business transformations.

McKinsey has already successfully deployed Google Cloud’s infrastructure and technology in various industries, helping clients improve productivity, streamline operations, and maximize AI investments. Notable projects include a gen AI-powered search platform and a virtual agent for banking, which have significantly enhanced operational efficiency and customer service.

The leaders of both companies were quick to highlight the partnership’s capacity to drive tech-enabled transformations and optimize gen AI projects for clients, potentially unlocking over $4 trillion in value.¹

Likewise, Oracle is actively enhancing its generative AI capabilities to stay competitive in the increasingly crowded cloud market.

Despite Oracle’s slower start in cloud infrastructure compared to giants like Amazon, Microsoft, and Google, the company is making considerable strides. In April, Oracle’s CEO, Safra Catz, reported robust growth in cloud infrastructure contracts and a 25% increase in cloud revenue year over year. The company anticipates AI will have a more pronounced impact on its revenue starting from FY25.

Oracle is also focusing on specialized areas like sovereign AI cloud services, which cater to countries wanting to store AI data within their borders, positioning itself as a leader in this emerging field. Further, a partnership with Nvidia aims to deliver sovereign AI solutions globally.

These strategic moves have been well-received, with analysts from Wedbush Securities and JPMorgan noting Oracle’s potential for significant growth and increased IT spending in AI across the software landscape.²

Company Specific Updates

Alphabet Inc

Alphabet Inc. surpassed Q1 revenue expectations due to cloud computing growth and a strong performance in search advertising. The company reported sales of $67.6 billion, beating analyst projections of $66.1 billion and a net income of $1.89 per share against an expected $1.53. Alphabet also announced a dividend and a $70 billion stock buyback plan.

This financial success is partly driven by significant advances in AI, which has bolstered demand for Google’s cloud services. Google Cloud saw a 28% increase in revenue, reflecting strong industry-wide demand. Despite Google’s status as the third largest player in cloud computing behind Amazon and Microsoft, its expertise in AI is seen as a key advantage in closing this gap.

Google Cloud’s sales reached $9.6 billion, and its profit was $900 million, surpassing expectations. YouTube also reported strong revenue growth, benefiting from strategic investments and enhancements.

While Alphabet is navigating significant challenges and competition, particularly in AI and digital advertising, its strong financial performance and strategic focus on AI and cloud computing are driving growth and market confidence.³

Microsoft Corp

Microsoft outperformed expectations in its latest quarterly earnings, bolstered by strong corporate demand for its cloud services and artificial intelligence (AI) offerings, the company reported. Q3 revenue surged 17% to $61.9 billion, surpassing the $60.9 billion analysts had forecast. This growth was driven in part by robust sales in Microsoft’s Azure cloud division, which saw a 31% increase, edging past the anticipated 29%.

AI initiatives contributed significantly, accounting for about 7% of Azure’s growth, up from 6% in the previous quarter. Microsoft CEO Satya Nadella has integrated AI technology from OpenAI across the company’s product suite, further energizing the software giant’s performance.

Looking ahead, Microsoft projects Azure’s growth to remain strong, anticipating a 30% to 31% rise in the next quarter, which would exceed the 29% growth analysts expect. The company also forecasts a sales and operating income increase of more than 10% for the fiscal year starting July 1.

Additionally, revenue from Microsoft’s commercial cloud products jumped 23% to $35.1 billion, with commercial bookings soaring 29%, suggesting robust future revenue prospects.⁴

Investing in Cloud Computing with DATA ETF

If you’re interested in investing in a cloud computing ETF, consider the Evolve Cloud Computing Index Fund (DATA ETF), Canada’s first cloud computing ETF. DATA ETF invests primarily in equity securities of companies located domestically or internationally that have business operations in the field of cloud computing. To learn more about DATA ETF, please click here:

Portfolio Strategy and Activity

For the month, Alphabet Inc made the largest contribution to the Fund, followed by Western Digital and Datadog Inc. The largest detractors to performance for the month were Salesforce Inc, followed by Oracle Corp and ServiceNow Inc.



1. “McKinsey and Google Cloud help companies tap into $4 trillion of business value with generative AI,” McKinsey, April 4, 2024;
2. Chiang, S., “Oracle boosts its generative AI capabilities as cloud competition heats up,” CNBC, April 29, 2024;
3. Love, J. & Alba, D., “Alphabet Beats Revenue Estimates as AI Fuels Cloud Growth,” Bloomberg, April 25, 2024;
4. Bass, D. & Davalos, J., “Microsoft Sales, Profit Beat Expectations on AI Demand,” Bloomberg, April 25, 2024;

Header Image Source: Getty Images Credit: John Lund

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