Insider Monkey favors Microsoft over Amazon for a risk-adjusted AI-cloud investment case at similar forward earnings multiples, citing Microsoft's $182.9 billion in full-year operating cash flow and Amazon's trailing $7.6 billion free-cash-flow outflow amid AI spending.
Microsoft's fiscal fourth-quarter Azure revenue grew 43%, and Microsoft Cloud revenue rose 27% to $59.3 billion; commercial remaining performance obligations reached $678 billion, up 84%. The analysis says Microsoft can spread data-center investment across Azure, Microsoft 365, GitHub, security and Copilot. Amazon's second-quarter AWS sales rose 37% to $42.2 billion, while AWS operating income climbed to $16.6 billion from $10.2 billion, about a 39% segment margin.
Microsoft traded at about 25.3 times forward earnings versus Amazon's 27.7, but roughly 55 times free cash flow as AI infrastructure spending absorbed cash; depreciation and AI usage also pressured its cloud gross margins. Amazon's property-and-equipment purchases increased by $66.1 billion, primarily for AI, while trailing operating cash flow reached $161.4 billion.
