Amazon, Google, and Microsoft are seeing unprecedented gains in cloud, thanks to AI1 May 2026 12:59
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The big three cloud service providers, Amazon (AMZN), Google (GOOG) (GOOGL), and Microsoft (MSFT), demonstrated to investors that heavy spending on artificial intelligence is paying off in spades, as evidenced by their latest quarterly results.
Collectively, the largest U.S. tech giants, which also includes Meta Platforms (META), now expect to spend $725B on capital spending this year, up from a prior outlook of $650B.
And despite previous worries about spending, the proof is in the proverbial pudding. “Revenue is accelerating across the board” as the hyperscalers add capacity to “meet surging demand,” Morgan Stanley said in a recent research note.
Azure boom
For the period ending March 31, Microsoft said it earned an adjusted $4.27 per share as revenue rose 18% year-over-year to $82.89B. Included in that was $34.7B from its Intelligent Cloud division, which consists of its Azure cloud unit. Microsoft said Azure revenue grew 40% year-over-year and 39% in constant currency.
On its earnings call, Microsoft said it expects Azure's growth rate to be 40%, above the 37% analysts were expecting and the second quarter in a row of 40% growth, as broad and growing customer demand continues to exceed supply.
In addition, Microsoft said it is still balancing the amount of supply it can allocate internally versus other high ROI priorities. The company also said it expects roughly $190B in capex spending in 2026.
Google Cloud is skyrocketing
Google parent Alphabet saw an even stronger growth rate, as Google Cloud revenue surged 63% year-over-year to $20B, surpassing that mark for the first time.
The Sundar Pichai-led company also noted that its cloud backlog nearly doubled sequentially to $462B, amid surging enterprise AI demand. It also said that AI is now the primary growth driver for its cloud unit and that revenue from products built on its AI models skyrocketed nearly 800% year-over-year.
The tech giant also upped its fiscal 2026 capex spending plans, as it now expects to spend between $180B and $190B, compared to the prior guidance of $175B to $185B. Additionally, Alphabet said it expects 2027 capex to “significantly increase” when compared to 2026 levels, as the AI opportunity is larger than first thought.
The reemergence of the 800-pound gorilla
Some industry watchers have thought that AWS, often referred to as the 800-pound gorilla of the cloud computing market, lagged Azure and Google Cloud for its technical prowess when it came to AI.
Not anymore.
Revenue attributed to AWS came in at $37.6B for the first-quarter, up 28% year-over-year, which marked its best growth rate since the middle of 2022.
Amazon CEO Andy Jassy echoed that narrative shift, as he highlighted the reasons that customers like OpenAI (OPENAI) and Anthropic (ANTHRO) are picking Amazon for their AI needs.
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