Alphabet shares rose 7% on Thursday. Google Cloud delivered record quarterly growth, surpassing Amazon Web Services and Microsoft Azure. AI demand is surging in the cloud infrastructure sector.
Google Cloud revenue rose 63% to $20.03 billion. This far beats analyst expectations. It marked its fastest growth since Google started reporting cloud results separately in 2020. Revenue from products powered by Google’s generative AI models grew 800% year over year. For the first time, Alphabet’s CEO said enterprise AI solutions are now the main driver of growth for the cloud business. The company’s custom tensor processing units are also becoming a strong alternative to Nvidia’s GPUs. This gives Google a new edge in the AI infrastructure market.
Amazon Web Services is still the global leader in cloud infrastructure. It grew revenue by 28% to $37.6 billion. This beat analyst estimates by almost $1 billion. Spending on AWS’s Bedrock platform, which provides tools for building artificial intelligence (AI) agents, jumped 170% from the previous quarter. Bedrock used more computing tokens (units that measure usage of computing resources) in the first quarter than in all its history since the 2023 launch. These results came just after AWS announced that OpenAI models (pre-trained AI applications developed by OpenAI) would be available through Bedrock. Early customer interest has been described as unprecedented.
Microsoft Azure grew 40% year over year, beating analyst expectations. The company expects Azure to grow 39% to 40% next quarter, above forecasts. Customers using Anthropic and OpenAI models on Microsoft’s platform doubled from the previous quarter. Despite strong results, Microsoft shares fell as investors focused on its $190 billion full-year capital spending plan.
The three companies plan to invest $600 billion in capital by 2026, highlighting the vast investment in AI infrastructure. Global cloud infrastructure spending reached $129 billion for the quarter, according to Synergy Research, which expects growth to continue as AI drives opportunities and increases cloud provider revenues. Newer providers like CoreWeave and Nebius account for about 5% of the market, adding competition below the leading three giants.
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