Google Cloud Doubled in a Year. So Why Did Amazon’s Shares Fall?

Google Cloud revenue doubled in a year. Amazon’s shares still fell.

That is the puzzle in this quarter’s earnings. All three big clouds reported faster growth. Yet the market did not cheer. It looked at the bill instead.

Three clouds, three growth rates

Start with the good news. Alphabet reported Google Cloud revenue of $30.71 billion, up from $15.16 billion a year earlier. CEO Sundar Pichai said Cloud revenue grew 103%, as reported by 9to5Google. Total Alphabet revenue reached $127.6 billion, up 25%.

Microsoft grew more slowly, but from a larger base. Its revenue was $92.3 billion, up 19%, and Azure grew 48%, according to a Vested Finance summary of the results. That article is secondary, so we treat the Microsoft numbers with care.

Amazon’s AWS posted $45.98 billion in sales, up 39.3%, reported by Fortune as the fastest growth in years. Total Amazon revenue was $201.9 billion, slightly below expectations.

The ranking is clear. Google is growing fastest. Microsoft and Amazon follow. All three are growing faster than most of us expected a year ago.

The bill arrives first

Growth needs capacity. Capacity needs data centres, chips and power. So every one of these companies spent heavily.

Alphabet put $51.4 billion into capital spending in the quarter, against $24.0 billion a year earlier, according to FourWeekMBA’s breakdown of the earnings release. Its 2026 range stays at $195 billion to $205 billion. The same source says Alphabet expects spending to rise significantly in 2027.

Microsoft reported $39.4 billion of spending on property and equipment, versus $19.4 billion a year earlier. Amazon spent $75.9 billion in the quarter and repeated its estimate of about $220 billion for 2026.

Add the three quarterly figures and you reach about $166.7 billion in three months. Treat that as a rough guide only. Each company defines capital spending in its own way.

Where the market looked

Here is the part that moved the share price. Fortune reports that Amazon’s free cash flow swung from positive $14.8 billion to negative $42.4 billion over the past year. Shares fell more than 6% in after-hours trading.

In other words, AWS is growing at its best pace in years, and Amazon’s cash is shrinking. Both facts are true at once.

Free cash flow is simple to explain. It is the cash left after a company pays to run and build the business. When it turns negative, the company must borrow, sell shares or draw down savings. That is why investors watch it so closely.

Demand is real, and it is committed

Why spend this much? Because customers have promised to buy. Fortune reports that Anthropic committed to spend at least $110 billion on Amazon cloud services from May 2026 through April 2036, regardless of actual usage.

Microsoft’s summary also points to future contracted revenue of $677 billion, up 73%. Google’s CFO told analysts that Google Cloud’s backlog was $561 billion, according to FourWeekMBA’s report of the call. We could not open the primary filings for either figure, so verify them before relying on them.

Backlog is a promise, not cash. It only becomes revenue if the capacity is built and the customer keeps using it. That is the bet.

Alphabet adds a usage signal. Its first-party model APIs process nearly 32 billion tokens a minute, more than four times a year ago, and the Gemini app has reached one billion users, 9to5Google reports. Tokens are the small chunks of text that models read and write. More tokens mean more compute.

Profit tells a different story

Cash is one lens. Profit is another. Google Cloud’s operating income was $11.1 billion, against $3.6 billion a year earlier, FourWeekMBA reports. That lifts its operating margin from 23.7% to 36.2%.

So Google is growing faster and earning more on each dollar. That is the best combination in this round of results.

Alphabet’s group net income was $26.17 billion, down from $34.9 billion a year earlier, 9to5Google reports. The article does not explain the fall, and we do not guess.

Amazon’s profit was $20.7 billion, below expectations and below a year earlier. Amazon blamed the drop on gains it booked a year earlier from its Anthropic investment, Fortune reports.

Microsoft’s profit picture also carries a footnote. The Vested Finance summary says OpenAI added a small gain of $207 million this year, against a $3.1 billion loss a year ago. Without that effect, net income grew 18% instead of 32%.

The lesson is practical. Read the profit line, but check what sits inside it. One-off gains and losses from AI investments can move the number a lot.

One customer, three backlogs

Here is a detail that is easy to miss. The Anthropic IPO filing, as covered by The Next Web, lists minimum compute commitments to Google, Amazon and Microsoft. The figures are at least $114.5 billion, at least $110 billion and at least $44.9 billion.

So one fast-growing customer appears in all three clouds’ future revenue. We cannot say how much of each backlog it makes up, because the companies do not break it out. But it shows how concentrated some of this demand may be.

Concentration is not a flaw by itself. It does mean the clouds share some of the same risk.

What we think

Our view is simple. The AI cloud race has moved from a growth story to a funding story. Revenue is no longer the hard part. Paying for the buildout is.

Look at the difference between the three. Alphabet grows fastest and posts the best cloud margin. Amazon grows well and shows the sharpest cash strain. Microsoft sits between them. The gap shows how much each company can fund from its own business before it needs outside money.

We covered the earlier phase of this story when Microsoft first showed that AI spending could make money. We also explained why Big Tech is fighting over chips rather than models. This quarter connects the two. The chips are bought. The question now is who carries the cost.

What to watch next

Watch three numbers. First, free cash flow at Amazon in the next quarter. Second, whether Alphabet’s 2027 spending jump matches its backlog growth. Third, whether customer commitments turn into usage on schedule.

If those hold, today’s spending looks wise. If they slip, the market will punish the spenders first. Remember that all three companies are betting on the same demand.

For builders, the message is practical. Cloud capacity is expanding fast, but the providers must recover that cost. Expect pricing and commitment terms to matter more over the next year.

Sources & Credits

Text credit & news reporting source: Fortune / 9to5Google.

• 9to5Google: Alphabet Q3 2026 earnings
• Fortune: Amazon shares sink as AI spending overshadows cloud growth
• Vested Finance: Microsoft Q1 FY27 results
• FourWeekMBA: Google Cloud revenue and capex

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Question for you: Which is the bigger risk for the cloud giants: spending too much on AI capacity, or spending too little? Tell us in the comments.