Bernstein’s Q1 2026 analysis shows that Google Cloud delivered a 63% year‑over‑year revenue increase, the strongest among the major hyperscalers and the leading AI cloud platform. The business’s operating margin widened to roughly 33%, indicating higher profitability as enterprise spending on AI infrastructure and cloud services accelerated. Google’s incremental cloud revenue also grew the most, driven by robust demand for Gemini models, AI services, and traditional enterprise workloads.
Microsoft’s Azure platform recorded approximately 40% revenue growth, with annualized AI revenue now surpassing $37 billion. Growth was underpinned by continued uptake of Copilot, GitHub, and Azure AI services, although the company flagged ongoing capacity constraints that could limit short‑term expansion.
Amazon Web Services posted a 28% rise in cloud revenue and reported a backlog of $364 billion. The segment benefited from triple‑digit AI demand, adoption of the Trainium chip, and expanding enterprise workloads, but supply‑chain constraints on capacity were noted.
Oracle emerged as the fastest‑growing major cloud provider, with Oracle Cloud Infrastructure revenue climbing 93% YoY. Remaining performance obligations for Oracle’s cloud services increased to $638 billion, reflecting accelerating demand for AI‑focused infrastructure.
Across the hyperscale sector, combined capital spending by the largest providers is projected to exceed $620 billion in the current year as firms race to expand data‑center capacity to meet surging AI demand. The report highlights a shift in capacity constraints from GPU shortages to the availability of powered data‑center capacity, making deployment speed and infrastructure availability increasingly critical competitive advantages.