Despite fears about AI spending, the latest earnings from Big Tech show that demand for AI infrastructure remains resilient. Strong cloud growth at Microsoft, Amazon and Alphabet suggests their AI investments are beginning to pay off. The companies also committed aggressive capital spending plans, providing fresh evidence that demand for AI chips, data centres and related infrastructure will remain strong.
Acknowledging that the demand is real, Sandeep Nambiar, Co-Founder and CEO, OneCap, says, “For example, Microsoft is carrying $678 billion of contracted future revenue, up 84%. Those aren’t empty data centres waiting on customers.”
The $2 trillion dollar shift
Nearly $2 trillion has shifted into or out of the six Big Tech companies that have reported earnings so far this season. The biggest winners were Amazon, Microsoft and Alphabet, showing that their massive AI spending is starting to pay off.
Here’s a look at the results, company by company:
- Microsoft reported 39% year-on-year growth in Azure, while Microsoft Cloud revenue exceeded US$51.5 billion for the first time. More importantly, management said Azure’s growth was constrained not by customer demand but by GPU availability.
- Amazon echoed a remarkably similar message. Its cloud division, Amazon Web Services (AWS), reported 37% year-on-year revenue growth to US$42.2 billion, marking the fastest expansion in more than four years. The company also warned that AI demand could exceed available cloud capacity through 2028.
- Apple’s earnings, revenue and iPhone sales were all above market expectations; however, the company issued weak guidance for the current quarter, citing “supply constraints.” Apple said revenue growth in the current quarter will be between 9% and 11%, missing analysts’ expectations for 12% growth, according to LSEG.
- Alphabet delivered $119.796 billion in Q2 revenue, with Google Cloud accelerating to 82% growth and cloud operating margin jumping to 35.6%. Capex hit $44.9 billion in a single quarter, free cash flow fell to negative $5.9 billion, and management raised full-year 2026 capex guidance to $195 billion to $205 billion.
- Meta posted $6.18 in earnings per share, missing Wall Street expectations of $7.14, according to Bloomberg consensus estimates. Revenue was $60.8bn, beating analyst predictions of $60.23bn.
The next phase: Bigger challenges ahead
With higher earnings, the constraint has also grown. The challenge is no longer just a shortage of AI chips. Companies are now competing for power, land and memory.
“Apple flagged advanced chip shortages and sharply rising memory prices in the same week. When a phone maker and a cloud provider are competing for the same components, that’s a real squeeze,” says Nambiar
“Also, investor patience has run out. Alphabet raised its capex guidance to $195-$205 billion, and the stock fell by 7%. Amazon raised its target by $20 billion to $220 billion, and its shares rose more than 10%. Same move, opposite reaction. The only difference was whether cloud revenue moved in the same quarter.”
As the AI race enters a new phase, it is time for companies to prove they can overcome infrastructure constraints and turn record AI spending into sustained growth and profits.
