Google Crushes AWS, Microsoft Azure as Hypergrowth Hits the Cloud

Google, Microsoft, Amazon and Meta reported earnings on the same day, offering a clear snapshot of how the cloud market is evolving.

Google Cloud outpaced Microsoft Azure and AWS in Q1 FY26, with revenue rising 63% to $20 billion, driven by demand for enterprise AI solutions and infrastructure. In comparison, AWS reported a 28% year-over-year increase in sales to $37.6 billion. 

During the same period, Microsoft’s Intelligent Cloud segment, reported as part of its Q3 FY26 results, earned $34.68 billion in revenue, up 30% from a year earlier. Azure revenue grew 40% year-over-year in constant currency.

There is No Stopping Google 

Despite trailing in overall market share, Google is closing the gap. According to estimates from Synergy Research Group, Amazon held a 28% share of the global cloud infrastructure market in Q4 2025, ahead of Microsoft Azure at 21% and Google Cloud at 14%. 

That gap has narrowed steadily over the past two years, helped by demand for training and running large AI models, with Google’s TPU infrastructure and Gemini models gaining traction.

“Our enterprise AI solutions have become our primary growth driver for cloud for the first time. In Q1, revenue from products built on our GenAI models grew nearly 800% year-over-year,” said Google CEO Sundar Pichai, during the earnings call. 

Pichai added that Google Cloud’s backlog nearly doubled to $462 billion, highlighting strong demand constrained by limited compute capacity. To address this, Google is increasing its 2026 capital expenditure to $180–190 billion, with more than half of its compute investment now directed toward the Cloud business. 

Alphabet spent $35.7 billion on capital expenditures in Q1 alone. “Approximately 60% of our investment in technical infrastructure this quarter was in servers, and 40% was in data centres and networking equipment,” said CFO Anat Ashkenazi during the earnings call.

Google is also beginning to sell its custom eighth-generation Tensor Processing Units, including TPU 8t and TPU 8i, to select enterprise customers for their data centres.

AI is now central to the business. Gemini processes more than 16 billion tokens per minute via API, up 60% from the previous quarter.“Gemini Enterprise is seeing tremendous momentum with 40% growth quarter-over-quarter in paid monthly active users,” Pichai said.

The company also reported a sharp rise in large deals, more than doubling the number of contracts in the $100 million to $1 billion range, alongside several deals exceeding $1 billion.

The $32 billion acquisition of cloud security firm Wiz, which closed on March 11, is now integrated within Google Cloud and is expected to strengthen the company's enterprise security positioning.

Amazon’s $43 Billion Bet  

If Google had the flashiest quarter, AWS entered a period of re-acceleration, largely driven by its custom chips and the Bedrock platform.

“AWS growth continued to accelerate, up 28% year over year, the fastest growth rate in 15 quarters, up $2 billion quarter over quarter, the largest Q4 to Q1 AWS revenue increase ever,” said CEO Andy Jassy during the company’s earnings call. 

He added that the business has reached a $150 billion annualised run rate, adding that growth at such a scale is unusual and was last seen when AWS was roughly half its current size.

Moreover, Jassy shared that AWS’s AI-related annualised revenue surpassed $15 billion within three years, marking nearly 260-fold growth.

Amazon’s custom silicon business, spanning Graviton and Trainium chips, has emerged as a major growth driver for AWS, crossing a $20 billion annual revenue run rate and expanding at triple-digit rates. 

“If our chips business was a standalone business and sold chips produced this year to AWS and other third parties as other leading chip companies do, our annual revenue run rate would be $50 billion,” said Jassy. 

Trainium2 has largely sold out, while Trainium3, launched in early 2026, delivers 30–40% better price-performance and is already nearly fully subscribed. Anthropic and OpenAI have signed multi-gigawatt, multi-year deals, bringing cumulative Trainium commitments to beyond $225 billion.

He further added that Amazon Bedrock, a cloud computing service powered by AWS for building AI applications and used by more than 125,000 customers, runs most of its inference on Trainium. “Almost 80% of the Fortune 100 companies are using Bedrock,” said  Jassy. 

The platform now has access to OpenAI models, including GPT-5.5 and Codex, after Microsoft revised its relationship with OpenAI, allowing it to serve its models on other cloud platforms as well.

Amazon is backing this growth with massive infrastructure investment, projecting total capital expenditure for 2026 to reach $200 billion. 

Defending the spending, “We’re not investing approximately $200 billion in capex in 2026 on a hunch,” said Jassy in a letter to shareholders published on April 8. 

During the earnings call, he pointed to AWS’s order backlog, which reached $364 billion at the end of the quarter, as evidence of contracted, long-term demand from a broad customer base.

Amazon spent $43.2 billion on capex in Q1 2026 alone, primarily on AWS and AI data centres.

Modest Microsoft 

Microsoft Azure was not the fastest-growing cloud this quarter, but it still delivered, with total Microsoft Cloud revenue exceeding $54 billion, up 29% year-over-year.

The company now has more than 20 million seats for its Microsoft 365 Copilot AI add-on for commercial Office subscriptions, up from 15 million in January. The number is expected to rise further in the September quarter, Microsoft CFO Amy Hood said during the company’s earnings call.

“Weekly engagement is now at the same level as Outlook, as more and more users make Copilot a habit,” said CEO Satya Nadella on the earnings call. “Our AI business surpassed $37 billion ARR, up 123%,” he added.

Microsoft is strengthening its edge by integrating Anthropic models into its cloud and Copilot, amid rising popularity among developers. 

“We expect to invest roughly $190 billion in capital expenditures, including approximately $25 billion from higher component pricing, and we expect to remain constrained at least through 2026,” said Hood. 

She added that Microsoft remains confident in returns given strong demand and increasing usage, and expects Azure growth to accelerate modestly in the second half of the year.

Azure’s remaining performance obligation (RPO) rose to $627 billion, up 99% year over year.

“We expect Q4 revenue growth to be between 39–40% in constant currency against a strong prior-year comparable that included accelerating growth,” Hood said.

The Bottom line

Across all three cloud providers, demand for AI infrastructure is accelerating faster than supply. 

Growth is no longer limited by customer adoption, but by the ability to bring data centres, chips, and power online quickly enough. Together, the three companies plan to spend nearly $570 billion in capex in 2026 alone, with backlogs pointing to a revenue runway that supports it.