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GCP outperforms in Q1 with 44% growth as CEO promises a "long-run view"

Satya Nadella: "I don't hear of businesses looking to their IT budgets as the place for cuts... "

Updated 23:00 April 27 to remove Azure from headline, add Azure as well as Microsoft Cloud figures.

Alphabet CEO Sundar Pichai said the company was "taking a long-run view" on Google Cloud Platform (GCP) and dedicated to "methodically scaling up and executing better" as the company announced Q1 revenue growth of 44% for its cloud offering -- double digits higher than Microsoft Cloud's 32% quarterly growth.

Both Google owner Alphabet and Microsoft posted quarterly results late Tuesday, reporting revenues of $55.3 billion (net income $17.9 billion) and $49.4 billion (net income $16.7 billion) respectively.

"We continue to deliver differentiated [cloud] products across four distinct areas" said Pichai on an earnings call, saying Alphabet more broadly had invested $40 billion in R&D in the US over the past 24 months.

He pointed to cybersecurity ("assured workloads to address digital sovereignty in the European Union; virtual machine threat detection, a first-to-market, agentless malware detection capability; an advanced intrusion detection system for network threat detection") new data lake/"data cloud" offerings including "serverless Spark to run batch Spark workloads; BigLake, a new storage engine that unifies data warehouses and lakes; and Dataplex, which provides unified management and governance of data" and analytics offering BigQuery, also emphasising Google Cloud's traditional strength in AI as among product highlights and pointing to Home Depot's use of Google's Contact Center AI platform which it said had improved call containment by 185%.

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Google Cloud outperforms Azure

Cloud growth from a larger foundation also continued at Microsoft. Server products and cloud services revenue increased 29% driven by Azure and other cloud services revenue growth of a robust 46%: "Our cloud platform and strong sales execution drove better than expected commercial bookings growth of 28% and Microsoft Cloud revenue of $23.4 billion, up 32% year over year,” said Amy Hood, chief financial officer of Microsoft.

“Going forward, digital technology will be the key input that powers the world’s economic output,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience, and do more with less" -- adding on an earnings call that "the number of $100 million-plus Azure deals more than doubled year over year, and we are seeing consumption growth across every industry, customer segment, and geography..."

"Cosmos DB transactions and data volume increased over 100% year over year for the third quarter in a row" he added, as the fully managed NoSQL database offering continued to perform well in a competitive space.

Against a challenging macroeconomic backdrop, exacerbated by the war in Ukraine, Microsoft's CEO struck a positive note, telling analysits on an earnings call: "In the conversations we are having with our customers, the interesting thing I find from perhaps even past challenges, whether macro or micro, is I don't hear of businesses looking to their IT budgets or digital transformation projects as the place for cuts. If anything, some of these projects are the way they're going to accelerate their transformation or, for that matter, automation, for example. I have not [previously] seen this level of demand for automation technology to improve productivity because in an inflationary environment, the only deflationary force is software" Satya Nadella added late Tuesday.

Pichai meanwhile said Google was continuing to take the fight to Microsoft on collaboration tools as well, saying to support hybrid work it had introduced new collaboration features, like  bringing Google Meet directly into Google Docs, Sheets, and Slides: "You can now live stream to up to 100,000 people who can also participate in Q&A and polls. We also launched the next wave of innovation in Google Docs with smart canvas, including auto-generated summaries and pageless format in Docs, smart chips, and automating workflow using Gmail. Smart canvas has seen very rapid uptake with more than 6 million checklists and 6 million smart chips being added to documents each week."

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