Microsoft or Amazon: If I Could Only Own One for the Next 5 Years, It Would Be This One
Azure and AWS both posted record-breaking quarters, but one company's cash machine quietly outpaces the other by tens of billions of dollars each year. The gap between them reveals which stock earns a five-year hold and which one demands patience…
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Microsoft (NASDAQ:MSFT | MSFT Price Prediction) and Amazon (NASDAQ:AMZN) reported earnings on July 29 and July 30. Both showed cloud demand outpacing supply. Microsoft sells AI through software seats and Azure. Amazon combines AWS with retail, ads, and experimental projects. Over five years, that difference will decide which stock does better.
Azure Tops $100 Billion as AWS Posts Its Fastest Growth in 18 Quarters
Microsoft’s fiscal Q4 revenue reached $90.01 billion, up 17.8%, and Azure grew 43%. Growth that is speeding up at that size is rare. Microsoft 365 Copilot passed 30 million paid seats, and net new paid seats more than doubled sequentially. That suggests customers are moving beyond trial runs. Commercial remaining performance obligations (signed contracts not yet booked as revenue) hit $678 billion, up 84%. OpenAI commitments make that number look bigger, but it still rose 25% excluding OpenAI.
Amazon’s revenue rose to $200.61 billion, up 19.6%. AWS grew 37% to $42.23 billion, and Andy Jassy said “AWS is booming right now.” Retail margins stay thin. North America earned a 7.9% operating margin, and International earned just 4.1%.
| Business Driver | Microsoft | Amazon |
|---|---|---|
| Growth Engine | Azure and Copilot | AWS and advertising |
| Contract Backlog | $678B | $496B (AWS) |
| Operating Margin | 46.8% | 11.2% |
Software Toll Booth vs. Everything Store With a Cloud Attached
Microsoft makes money from AI in several ways: Azure usage, Copilot seats, GitHub usage billing, Foundry and security. Its catalog offers over 11,000 models, so Azure wins no matter which model a customer picks. Satya Nadella put it simply: “Any given model at any given time is swappable.”
Amazon spreads its money wider. It plans about $200 billion in 2026 capital spending across AI, chips, robotics and satellites. Amazon Leo has close to 400 satellites in orbit. That ambition costs cash. Free cash flow over the past 12 months was -$7.6 billion, while Microsoft produced $66.99 billion in fiscal 2026.
Capex Payback Will Decide Who Pulls Ahead
Microsoft expects fiscal 2027 capital spending of about $175 billion, with operating margins down less than a point and free cash flow staying positive. I will be watching whether usage-based Copilot billing speeds up Microsoft 365 growth. At Amazon, management says servers pay for themselves in a little less than three years. Jassy thinks AWS could “very possibly be a trillion dollar annual revenue business for us in time.” Free cash flow will have to back that up.
Why Microsoft’s Cash Machine Stands Out for the Next Five Years
Microsoft has the stronger five-year profile. Its margins turn each AI dollar into profit faster, and its backlog gives me more visibility than Amazon’s retail business can. At a forward P/E of 25 against Amazon’s 24, I pay only a small premium for that. Microsoft has lagged over the past year, gaining 0.97% while Amazon gained 16.02%. Still, cash generation gives Microsoft the edge over a five-year horizon.
Amazon fits investors who want a wider range of results from Zoox, Leo and grocery. I’d change my mind if Amazon’s free cash flow turns strongly positive while AWS keeps speeding up.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
