Microsoft vs Google vs Amazon: Cloud Growth Soars as AI Spending Hits Record Highs in Q3 2026 Earnings
In 48 hours, the three companies running most of the world's cloud infrastructure reported results for the same three months — and told the same story. Cloud demand, driven by AI, is growing faster than expected, and the data-centre bill is now tens of billions of dollars per quarter.
This is a comparison of results already reported, not breaking news: Microsoft and Alphabet (Google's parent company) reported on 28 October 2026, Amazon on 29 October 2026, all for quarters ended 30 September 2026. Every figure comes from the companies' own releases; gaps are flagged, not filled from press reports.
Microsoft: Azure grew 48%, and customers have committed $677 billion
Microsoft reported revenue of $92.3 billion for its fiscal first quarter, up 19%, and operating income of $45.9 billion, up 21%. Microsoft Cloud revenue reached $63.9 billion, up 30%. Azure revenue alone grew 48%, with no dollar figure disclosed.
The most striking number was not revenue. Commercial remaining performance obligation — signed customer contracts not yet delivered — reached $677 billion, up 73%: customers have committed to far more cloud capacity than Microsoft has yet built or billed, the clearest evidence in these reports that demand is running ahead of supply.
Two earnings-per-share numbers circulated in early reporting — $4.89 and $4.92 — and both are correct. GAAP diluted EPS were $4.92, up 32%, on net income of $36.6 billion; non-GAAP EPS, stripping out Microsoft's investment in OpenAI, were $4.89, up 18%, on net income of $36.4 billion. A year earlier that investment produced a $3.1 billion loss; this quarter it added $207 million.
Alphabet: Google Cloud more than doubled, but a paper loss cut headline profit
Alphabet reported revenue of $127.6 billion for the third quarter of 2026, up 25%, and operating income of $40.6 billion, up 30%, a margin of 31.8%. Headline profit went the other way: net income available to common stockholders was $26.2 billion, and diluted EPS were $2.12, down from $2.87, because of an $8.2 billion net loss in "other income (expense)", driven by an $8.7 billion loss on equity securities — paper losses on investments the company holds. The release states this cut net income by $6.7 billion and EPS by $0.55. The operating business grew sharply; the value of investments fell.
The operating story was Google Cloud. Revenue reached $30.7 billion, up 103% — more than double the $15.2 billion of a year earlier, and by far the fastest cloud growth of the three. Cloud operating income nearly tripled, from $3.6 billion to $11.1 billion, a margin of about 36%. Alphabet said growth was led by Google Cloud Platform and enterprise AI infrastructure and solutions, with sales of its TPU systems — custom chips for AI training and inference — a meaningful contributor.
Alphabet also disclosed the cost of keeping up: purchases of property and equipment were $51.4 billion in the quarter, and free cash flow was negative $9.1 billion ($19.7 billion trailing twelve months).
Amazon: AWS grew 39%, and the company expects that pace to continue
Amazon reported net sales of $201.9 billion for the third quarter of 2026, up 12% (13% excluding foreign-exchange effects). Operating income rose to $28.1 billion from $17.4 billion, a record 13.9% margin, driven by AWS.
AWS net sales reached $46.0 billion, up 39%, which Amazon said was its fastest growth in nearly five years, at a $184 billion annualised revenue run rate. AWS operating income rose to $17.8 billion from $11.4 billion.
Headline profit fell, for a reason similar in kind to Alphabet's: net income was $20.7 billion, or $1.89 per diluted share, down from $21.2 billion and $1.95, because the year-earlier quarter included $9.5 billion of pre-tax gains from Amazon's investments in Anthropic.
On spending, Amazon was the most explicit: it still expected 2026 cash capital expenditure of approximately $220 billion. For the trailing twelve months, free cash flow was an outflow of $42.4 billion, against an inflow of $14.8 billion a year earlier, driven primarily by a $94.8 billion year-on-year increase in purchases of property and equipment — an increase Amazon said "primarily reflects investments in artificial intelligence".
Amazon gave the boldest forward statement of the three. Chief executive Andy Jassy said AWS was seeing "projected revenue growth rates of over 40% both in 2027 and in 2028" — a projection, not a result, but a striking claim from the world's largest cloud provider.
Head to head: the same quarter, measured the same way
The same quarter, from each company's own release:
| Metric | Microsoft (fiscal Q1) | Alphabet (Q3) | Amazon (Q3) |
|---|---|---|---|
| Total revenue / net sales | $92.3bn, +19% | $127.6bn, +25% | $201.9bn, +12% |
| Cloud revenue | $63.9bn (Microsoft Cloud), +30% | $30.7bn, +103% | $46.0bn (AWS), +39% |
| Cloud growth | Azure +48% (no dollar figure disclosed) | +103% | +39% |
| Cloud operating income | Not disclosed separately | $11.1bn (from $3.6bn) | $17.8bn (from $11.4bn) |
| Capital spending | Not disclosed in release | $51.4bn of property/equipment in the quarter | ~$220bn expected for 2026 |
| Free cash flow | Not disclosed | −$9.1bn (quarter) | −$42.4bn trailing 12 months |
| Demand signal | $677bn backlog, +73% | TPU sales a "meaningful contributor" | Projected AWS growth over 40% in 2027–2028 |
The table needs two caveats. The cloud figures are not perfectly like-for-like: Microsoft's "Microsoft Cloud" includes Microsoft 365 and Dynamics subscriptions alongside Azure, while Google Cloud and AWS are narrower infrastructure businesses. And the spending rows are not directly comparable — Alphabet reported a quarterly figure, Amazon a full-year expectation, Microsoft neither.
One pattern survives: all three cloud businesses accelerated at once, all three spend at a scale that turns free cash flow negative or sharply lower, and all three say demand exceeds capacity — a race constrained by chips, power and buildings, not customers. The market reaction was mixed: Alphabet's shares fell sharply in after-hours trading on 28 October despite record cloud growth, Microsoft's rose, and Amazon's fell on 29 October. Strong cloud numbers alone did not satisfy investors; the size of the AI bill was part of the verdict.
What it means for AI users and developers
For people who build on these clouds, the first implication is capacity. When demand runs ahead of supply, the newest AI hardware — the latest GPUs and custom accelerators — stays scarce and goes first to the largest customers. Smaller developers may find a specific chip or region unavailable, or wait longer for quota increases. None of the three releases announced price changes, so there is no evidence of an imminent price rise — scarcity, rather than list prices, is the constraint to watch.
Second, AI features inside everyday products will keep expanding, because that is where growth comes from: AI agents and Copilot-style tools at Microsoft, enterprise AI infrastructure and Gemini at Alphabet, and Bedrock at Amazon, where Fortune 500 spending was nearly seven times a year earlier. The model landscape stays fragmented — the same application may run OpenAI, Anthropic, Google or open-weight models on the same cloud.
Third, the risk investors watch: all three bet today's AI demand is durable, not a spike. If it is, the data centres pay for themselves many times over; if demand slows, the industry is left with very expensive buildings and hardware. Nothing in these releases suggests demand is slowing — but Microsoft's backlog and Amazon's projections are company statements about the future, to be weighed as such next quarter.
Key Takeaways
- All three reported for the quarter ended 30 September 2026: Microsoft $92.3 billion (+19%), Alphabet $127.6 billion (+25%), Amazon $201.9 billion (+12%).
- Cloud growth accelerated everywhere: Google Cloud +103% to $30.7 billion, Azure +48%, AWS +39% to $46.0 billion — its fastest in nearly five years.
- The AI build-out dominates costs: Alphabet spent $51.4 billion on property and equipment in one quarter; Amazon expects ~$220 billion of cash capital expenditure for 2026.
- Headline profit fell at Alphabet and Amazon on investment gains/losses, not operations: an $8.7 billion equity-securities loss at Alphabet; a $9.5 billion Anthropic gain a year earlier at Amazon.
- Demand exceeds supply: Microsoft's backlog hit $677 billion (+73%); Amazon projected AWS growth above 40% in 2027–2028. No overall winner from one quarter — the race is about capacity.
Conclusion
One quarter does not settle a contest, and this comparison crowns no winner. Microsoft has the largest contracted backlog, Alphabet the fastest cloud growth, Amazon the largest cloud business and the boldest projection. What they share matters more: AI demand is real, larger than the infrastructure built to serve it, and being met with spending at a pace unthinkable three years ago. The next test: whether capacity now being built arrives fast enough — and whether today's customers still need it.
Sources
- Microsoft, "Microsoft announces first quarter results" (fiscal year 2027 Q1, quarter ended 30 September 2026, published 28 October 2026): https://news.microsoft.com/source/2026/10/28/microsoft-announces-first-quarter-results-2/
- Alphabet Inc., Q3 2026 earnings release (quarter ended 30 September 2026, published 28 October 2026): https://s206.q4cdn.com/479360582/files/doc_news/2026/Oct/28/attachments/2026q3-alphabet-earnings-release.pdf
- Amazon.com, Inc., "Amazon.com Announces Third Quarter Results" (quarter ended 30 September 2026, published 29 October 2026, via Business Wire): https://www.businesswire.com/news/home/20261028373648/en/Amazon.com-Announces-Third-Quarter-Results
- Market reaction: after-hours share movements on 28–29 October 2026 as reported by news outlets (Reuters, CNBC and others) — used only to describe investor reaction, not as a source for any company figure.
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