Hyper-scalers accelerate

As artificial intelligence (AI) continues to advance everywhere and all at once, a recurring concern for investors has been the expanding capital requirements for the digital infrastructure that drives the technology. Indeed, the combined capital investment of cloud computing and data operators around the world is expected to rise from USD 840 billion this year to more than USD 1 trillion in 2027. While the scale of those investments continues to be questioned, revenues and profits from cloud computing services have accelerated. Last week, the three largest US cloud computing firms, Google parent Alphabet, Amazon, and Microsoft reported combined cloud revenues of USD 84.5 billion in 1Q26, up 39% year-on-year, an acceleration from the 33% growth the trio reported in 4Q25. Importantly, cloud segment margins for the group expanded 100bps quarter-over-quarter to 37.2%.

Source: Company filings, April 2026