Amazon: How AWS’ Slowing Growth Can Weigh on the Stock Price

In May’s roundup of cloud wars between Google, Microsoft and Amazon, we explained why Amazon holds the global market share dominance at 29%, with Microsoft’s Azure behind at 22% and Alphabet’s GCP at 12%.

Although Amazon benefited greatly from the first-mover advantage, we pointed out that Amazon’s Nova AI model is not keeping pace with ChatGPT, Grok, and Gemini. Given that AI integration goes hand in hand with cloud services, the risk for Amazon Web Services (AWS) is that its AI lag could slowly erode the “stickiness” of its platform.

In other words, clients who once prioritized AWS scalability and reliability may begin shifting workloads toward providers that offer more advanced AI-native tooling. Let’s take a closer look at whether this scenario is unfolding, so AMZN investors can reallocate accordingly.

AWS Growth Rate Examined

In the last reported earnings ending July, Amazon Web Services (AWS) generated $30.9 billion in revenue, which is 18.4% of the company’s total net sales of $167.7 billion. For comparison, Google Cloud Platform (GCP) makes up 14% of Alphabet’s total revenue, while Microsoft’s Intelligent Cloud (covering Azure) division contributed 39% to overall sales.

Microsoft is a legacy software company oriented toward both enterprise and consumer markets built on the Windows OS and Office monopoly. This is why it makes sense that its cloud services would have such a high percentage share. Alphabet competes directly with this ecosystem, but is focused more on consumer apps and advertising, leaving enterprise to Microsoft and Amazon.

Moreover, between Microsoft and GCP, enterprises typically pick Microsoft owing to its hybrid solution that integrates with on-premise servers, such as Azure Arc and Windows Server. Alphabet also doesn’t invite confidence for large businesses, as the company tends to abandon product lines. The notorious “Google Graveyard” signals potential workload disruption, making enterprises wary of GCP.

Keeping these factors in mind, here is how the growth rate of cloud services between the Big Three compared in Q2 2025 year-over-year:

• Amazon (AWS) – 17.5% to $30.9 billion

• Alphabet (GCP) – 32% to $13.6 billion

• Microsoft (Intelligent Cloud) – 26% to $29.9 billion

At the highest absolute revenue, AWS is clearly in the mature phase of growth where it is more difficult to sustain outsized expansion. Although neck and neck in cloud revenue with Microsoft, Amazon’s core identity is retail and logistics, while Microsoft is the most likely to retain enterprise stickiness owing to its full IT stack.

Google Cloud is the growth outlier, but with less than half the revenue base owing to its shifting consumer products and advertising focus.

Amazon’s AI Deployment

Although Amazon developed the appropriate infrastructure, including AI training chips Trainium and Inferentia, alongside Bedrock foundation model hosting, the company has yet to deliver a breakthrough AI product. AWS tiered its Nova LLM into four levels, starting from Nova Micro with 130k token context window to up to 1 million with Nova Premier.

Yet, according to Artificial Analysis, Nova Premier has an intelligence performance index of 35. For comparison, the latest GPT-5 ranks 69, Google’s Gemini 2.5 Pro at 65, and Elon Musk’s Grok 4 ranks at 68.

Narrative-wise, this puts Amazon in a lagging position, as a building service for developers. At the same time, although Microsoft’s relationship with OpenAI (ChatGPT) is somewhat tenuous, the company is the fastest in monetizing AI with Copilot. Moreover, Microsoft has an even wider range of AI building tools, which further reinforces its cloud stickiness.

When it comes to Alphabet, April’s Google Cloud Next conference clearly signaled commitments to enterprise-grade infrastructure, committing $75 billion for 2025 alone on servers and data centers. In particular, the launch of Cloud WAN as a global private wide-area network optimized for app performance.

The Bottom Line for AMZN Investors

Amazon Web Services remains the largest player in cloud by revenue, but the competitive gap is narrowing quickly. Microsoft’s cloud dominance is cushioned by its broader enterprise IT monopoly, while Amazon has a much greater dependence on AWS to offset its lower-margin retail business.

Even if AWS contributes a smaller percentage of revenue compared to Microsoft’s cloud, it contributes disproportionately to Amazon’s profitability and its “tech stock” narrative. This is further exacerbated by Alphabet’s efforts to fill the enterprise gap and its increasingly popular Gemini AI model.

In other words, if AWS cannot close its AI gap, investors may start valuing Amazon less like an innovation-driven cloud company and more like a traditional retail-logistics conglomerate. In the immediate term, this doesn’t signal bearishness on AMZN stock, but it warrants some growth calculus long-term.

Year-to-date, AMZN stock gained 4.1% value, presently priced at $229.32 per share. According to WSJ’s forecasting data 12 months ahead, the average AMZN price target is $263.34 per share, still offering high upside potential if exposure was taken prior to 2025.

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