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Google and Microsoft profits surge as cloud demand continues

Google Cloud and Microsoft Azure report impressive growth as digital adoption continues to accelerate

The Microsoft logo displayed on a building

Google and Microsoft reported surging profits on Tuesday as the two tech giants continued to capitalise on the COVID pandemic.

Alphabet, Google's parent company, posted first-quarter revenues of $55.31 billion, an increase of 34% year-on-year, and profits more than doubled to $17.93 billion, marking the third consecutive quarter of record profit for the company.

Similarly, Microsoft reported that revenues increased by 19% to $41.7 billion for the fiscal third quarter, its biggest quarterly increase since 2018, while profits soared by 44% to $15.5 billion.

Google's first-quarter growth was largely fuelled by its advertising business, which brought in $44.68 billion during the first three months of 2021 - a 32% increase compared to Q1 2020.

Google Cloud also reported impressive gains during the three-month period, although it continues to make a loss for Alphabet. The division reported $4.02 billion in revenue and had an operating loss of $974 million in Q1, compared to $3.83 billion in revenue and $1.24 billion in operating losses during Q4 2020, the first time Google broke out its cloud business' performance separately.

Meanwhile, Alphabet's "other bets", which include Verily and Waymo, reported revenue of $198 million and an operating loss of $1.15 billion.

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“Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We’ve continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations," said Sundar Pichai, CEO of Google and Alphabet.

Cloud remained Microsoft's biggest driver during its fiscal third quarter, ending in March 2021. Sales of commercial cloud products generated $17.7 billion in revenue, up 33% from a year earlier, and Azure revenues soared 50% during the three-month period. Commercial Office 365 products were also up 22% for the quarter as corporate customers continued to embrace cloud-based tools as a result of the shift to mass remote working.

“Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating, and it’s just the beginning,” said Microsoft CEO Satya Nadella. “We are building the cloud for the next decade, expanding our addressable market and innovating across every layer of the tech stack to help our customers be resilient and transform.”

Microsoft's Personal Computing business also saw growth of 19% year-on-year, thanks to a 10% increase in Windows OEM revenue, a 10% year-over-year increase in Windows commercial products and cloud services revenue, and a 35% jump in Xbox and gaming revenue.

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