SQL Server 2012 Performance Test
I would say using a local server would be better. At least that way you know the hardware and can simulate it as close to the production server as possible. With a cloud-based server you have no idea what the underlying hardware is, and with some services like Azure you will have to take the 3x write policy into account, different network connectivity, volume bursts for other activity within your "cloud", etc. So your performance picture will be quite different even if the hardware might be similar.