Microsoft's overall cloud business is estimated by one prominent analyst to be worth $1 trillion.
Wedbush Securities analyst Dan Ives in a note to investors following Microsoft's latest quarterly earnings report said he believes the company's cloud business accounts for $1 trillion of its current market cap of over $1.5 trillion.
Wedbush arrived at the valuation, Ives told Business Insider, based on the firm's estimates that Microsoft's cloud business will reach $100 billion in annual revenue by its next fiscal year. Microsoft's cloud business, under Ives' definition, includes not only the Azure infrastructure platform, but also cloud-based software like Office 365.
Microsoft calls this "commercial cloud" and on Tuesday said the business reached $15.2 billion in sales for its fiscal first quarter, up 31% compared with the same quarter last year. The company this summer said it surpassed $50 billion in annual commercial cloud revenue.
Meanwhile, revenue for Azure – Microsoft's actual cloud platform – is still the source of speculation. Microsoft doesn't break out revenue figures for Azure, and only shares the percentage by which it grew from the same period of the year before. In its first quarter, that figure was 48%.
Mizuho Securities in a Wednesday note to investors estimated Azure revenue makes up 17% of the company's total revenue, which it said is up from 13% a year ago. Piper Sandler analyst Brent Bracelin also said during the company's earnings call on Tuesday he estimates Azure has grown to 17% of revenue, which he said was up from 4% three years ago.
Microsoft reported $37.2 billion in Q1 revenue this week, so that would put Azure revenue around $6.3 billion. Leading rival Amazon Web Services, the largest player in the cloud market, posted revenue of $10.8 billion in its most recent quarter. Microsoft declined to comment beyond its official earnings release.
Bracelin, the Piper Sandler analyst, also estimated Azure has become a bigger business for Microsoft than Windows.
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