Google Inc (GOOG), Amazon.com, Inc. (AMZN), Microsoft Corporation (MSFT): This Internet Investment Hasn’t Paid Off

Azure remains second to Amazon Web Services

Microsoft’s infrastructure-as-a-service product, Azure, is its most intriguing product from a long-term standpoint. Hedge fund ValueAct poured $2 billion into Microsoft shares mostly on Azure’s potential. But Azure continues to lag Amazon Web Services, and there’s no guarantee it will ever catch up.

The exact market share for public cloud products like Azure and AWS remains unknown. But by most estimates, AWS dominates the sector. AWS had 35% of the market in the fourth quarter of last year, according to a study done by Synergy Research Group (via Datacenter Dynamics).

AWS has become a big part of Amazon.com, Inc. (NASDAQ:AMZN). According to Macquaire analysts, AWS will bring in $3.8 billion in revenue this year, and if it were a stand-alone company, would be worth $19-30 billion — 15-23% of Amazon.com, Inc. (NASDAQ:AMZN)’s total business.

It’s possible that Azure could upend AWS, but Morgan Stanley isn’t concerned. It thinks AWS’ lead is large, and that, by 2024, it will generate $24 billion in revenue per year, and threaten the entire legacy tech space (including Microsoft).

Investing in Microsoft

In the second quarter, hedge fund manager David Einhorn sold his entire stake in Microsoft. In a letter to investors, he wrote that a “decade of mismanagement” has set the company up for decline.

While a new, and more visionary CEO could, in theory, turn Microsoft around, the company is in danger. In most of its divisions, Microsoft lags its competition, and even in the areas where Microsoft Corporation (NASDAQ:MSFT) dominates (like Office), new competitors are rising to challenge the tech giant.

For now, investors should take a wait and see approach.

The article Nearly Every Part of Microsoft’s Business Is in Trouble originally appeared on Fool.com and is written by Sam Mattera.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Google. The Motley Fool owns shares of Amazon.com, Google, and Microsoft.

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