Amazon struggles to compete as AWS growth lags behind rivals

In the second quarter of 2025, Amazon reported sales of $167.7 billion, which represented a 13% increase compared to the previous year. While the growth exceeded analyst expectations, concerns were raised regarding the slower growth of Amazon Web Services (AWS), which reported an increase of 17.5% in revenue, far behind competitors Microsoft Azure and Google Cloud, which posted respective growths of 39% and 32%. With AWS commanding a significant market share of 30% compared to Microsoft Azure's 20%, this disparity in growth raises questions about Amazon’s approach in the rapidly evolving cloud services landscape. As the tech industry increasingly pivots toward artificial intelligence, AWS's strategy of requiring developers to select and integrate various computing services is perceived as a hurdle to faster adoption. In contrast, rivals like Microsoft and Google provide integrated AI solutions that streamline the development process. With the current competitive landscape dominated by players with more cohesive offerings, analysts suggest that AWS's future growth might be hindered unless Amazon accelerates its development of integrated AI solutions and forms strategic partnerships. Despite Amazon committing to a capital expenditure boost of 42% to $118 billion in 2025, the company’s leadership failed to adequately address market concerns about AWS missing out on the AI cloud opportunity. Pressure is on CEO Andy Jassy to rethink AWS's strategies to enhance transparency, embrace integrated solutions, and possibly restructure the operational framework to keep pace with competitors. Investors have become cautious due to AWS's inability to provide compelling reasons for its slower growth amid a burgeoning demand for AI capabilities that competitors seem to capitalize on more effectively. Future forecasts suggest that while Amazon aims for Q3 2025 sales to reach $176.75 billion, analysts are wary that without addressing the underlying growth issues within its cloud services, AWS could continue to lag significantly. Therefore, there is a mounting challenge for Amazon to innovate and respond to the evolving needs of the market if it wants to maintain its leading position in the cloud sector.