Alphabet and Amazon Outpaced Meta in AI Race: Quarterly Reports Confirmed Cloud Strength

Quarterly reports from Alphabet, Amazon, and Meta showed where AI investments are already converting into revenue and where the market sees mainly rising expenses. The main winners were Alphabet and Amazon: their cloud divisions accelerated growth against the backdrop of demand for computing resources for generative AI.

Where AI is already paying off

For Alphabet, the main signal was Google Cloud. Cloud business revenue grew 63% year-over-year and reached $20.02 billion — notably above analyst expectations. The company directly states that demand is now limited not by customer interest but by available capacity: quarterly capital expenditures reached $35.7 billion, and the capex forecast for all of 2026 was raised to $180–190 billion. At the same time, cloud backlog exceeded $460 billion and nearly doubled in the quarter.

"In the near term, we are limited by computational capacity," is how

Sundar Pichai described the cloud demand situation.

Amazon's picture is similar, but the scale is even larger. AWS added 28% and reached $37.6 billion in revenue — the fastest growth in 15 quarters. The company also reported EPS of $2.78 against consensus of $1.62, and its chip business exceeded $20 billion in annual run rate. The downside to this story is the same as competitors: infrastructure is expensive. Free cash flow over the past 12 months fell to $1.2 billion, primarily due to sharp growth in AI infrastructure investments.

Why the market punished Meta

From an operational perspective, Meta reported fairly well: quarterly revenue was $56.31 billion and exceeded expectations, and Q2 guidance in the range of $58–61 billion generally aligns with market consensus. But the main number for investors was not income, but capex: Meta raised its 2026 guidance to $125–145 billion instead of the previous $115–135 billion, citing more expensive components and additional data center expenses. After publication, the stock fell about 6% in after-market trading.

The difference with Alphabet and Amazon is how the market reads these investments. Google Cloud and AWS growth represents external demand: thousands of corporate clients already pay for models, accelerators, inference, and agent services. At Meta, most AI spending still works internally — on recommendation systems, generative advertising tools, and development of the Llama family. For business, this is strategically important, but in the near term it looks more like a cost center than a separate revenue line.

Key quarterly figures

The main takeaway from this wave of reports is not that companies are spending anomalously much, but that the market began to evaluate the same aggressive capex differently. Where additional data centers quickly convert into cloud sales and corporate AI service sales, investors are ready to tolerate massive bills. Where infrastructure primarily serves internal products, the reaction is noticeably harsher. This is why investment volumes themselves have ceased to be the main news.

• Google Cloud grew 63% and brought $20.02 billion in quarterly revenue for the first time
• AWS grew 28% to $37.6 billion — maximum rate in 15 quarters
• Alphabet raised its 2026 capex forecast to $180–190 billion
• Meta raised its capex forecast to $125–145 billion and received negative market reaction
• Combined AI spending by five hyperscalers in 2026 could now exceed $650 billion

This is more important than the quarterly surprises themselves. A year ago, the market debated whether a new bubble was forming around AI construction. Now the answer looks more concrete: demand for computing is real, but monetary return is distributed unevenly. Where AI is sold as a cloud service, the effect is already visible in revenue. Where companies build primarily for themselves, investors now demand more patience. This is where the new boundary passes between growth and simply expensive construction.

What this means

The first wave of the AI race is transitioning from "build at any cost" mode to "show us the money" mode. Alphabet and Amazon are already demonstrating that cloud has become the main channel for AI boom monetization, while Meta will have to prove that gigantic investments in its own infrastructure will also yield comparable returns.