Big Tech Earnings: Google Cloud Up 103%, Azure 48%, AWS 39%

Analysis

Alphabet, Microsoft and Amazon each reported cloud revenue growth between 39% and 103% for the September quarter, and each also reported capital spending far above a year earlier. Google Cloud revenue rose 103% to $30.7B, according to Alphabet's 8-K. Microsoft said Azure revenue increased 48% in its first quarter of fiscal 2027 (Microsoft's 8-K). Amazon reported that AWS segment sales rose 39% (Amazon's 8-K). Intel, a chip supplier rather than a cloud operator, reported Data Center and AI revenue up 78% (Intel's 8-K). The four filings are dated Oct. 28 and Oct. 29.

What did Alphabet, Microsoft and Amazon report?

• Alphabet — Google Cloud revenue rose 103% to $30.7B from $15.2B, and Cloud operating income was $11.1B versus $3.6B. Total revenue was $127.6B, up 25%.
• Microsoft — Revenue was $92.3B, up 19%. Microsoft Cloud revenue was $63.9B, up 30%, and Azure revenue increased 48%. Revenue in Agents and Infra was $76.8B in the quarter, up 25%. Commercial remaining performance obligation rose 73% to $677B.
• Amazon — AWS sales rose 39% to $46.0B, and AWS operating income was $17.8B versus $11.4B. Total net sales were $201.9B, up 12%, with International at $43.1B and North America at $112.9B in the quarter.

What do the companies say is driving it?

How much are they spending to keep up?

• Alphabet — Purchases of property and equipment were $51.4B in the quarter versus $24.0B a year earlier. Quarterly free cash flow was negative $9.1B, and trailing-twelve-month free cash flow was $19.7B.
• Microsoft — Additions to property and equipment were $39.4B versus $19.4B a year earlier, against $58.0B of cash from operations.
• Amazon — Trailing-twelve-month free cash flow was an outflow of $42.4B versus an inflow of $14.8B a year earlier, and the company said it continues to expect 2026 cash capital expenditures of approximately $220B.

Free cash flow is where the cost shows. Amazon's trailing figure swung to an outflow, and Alphabet's quarterly figure was negative in each of the last two quarters, while Microsoft's cash from operations still covered its additions. Our earlier coverage of Big Tech's AI capex and the market's doubts and of Alphabet's defense of its AI spending framed this question before the filings arrived.

What did Intel report on the supply side?

Intel's September-quarter revenue was $16.5B, up 21%. Its segments, as reported:

• Data Center and AI — $7.3B, up 78%. CFO David Zinsner called it Intel's strongest data center revenue growth in 15 years.
• Intel Foundry — $6.7B, up 58%.
• Client Computing and Physical AI Group — $8.1B, down 5%.
• Capital raise — Intel completed a $23B public equity offering, with net proceeds of $22.6B.

Intel also said it plans to acquire Classiq, which we covered when the deal was reported. For the fourth quarter it guided revenue of $15.0B to $16.0B.

What do the headline numbers leave out?

The growth rates are real, but profit comparisons are distorted by investment marks and by segments that are shrinking.

• Alphabet — Net income to common was $26.2B versus $35.0B, and diluted EPS was $2.12 versus $2.87. The release says a loss on equity securities of about $8.7B lowered net income by $6.7B and EPS by $0.55.
• Amazon — Net income was $20.7B versus $21.2B. Amazon attributes the decrease primarily to $9.5B of pre-tax gains in the year-earlier quarter from its Anthropic investments; our look at what an Anthropic IPO means for Amazon covers that stake.
• Microsoft — Devices and Consumer revenue was $15.5B, down 3%, and Windows OEM and Devices revenue decreased 22%.
• Intel — GAAP EPS was $0.60, down 33%, while non-GAAP EPS of $0.52 was up 126%. Zinsner said Intel sees the PC slowdown continuing at least through the first half of next year.

Amazon's fourth-quarter guide:

• Net sales — $240.0B to $247.0B, or 12% to 16% growth.
• Operating income — $28.5B to $33.5B.

Those guides, and the capex-versus-cash-flow lines in the next filings, are where the cloud growth will be tested against its cost.