Growth at the Big 3 cloud hyperscalers continues, but it is apparently being held back by capacity constraints.
That’s the prevailing theme coming from Microsoft, Google, and Amazon, which all recently reported financial results. Google Cloud reported its earnings on July 23, with cloud revenue hitting $13.62 billion for a 32 % year-over-year gain. Microsoft reported on July 30, with cloud revenue reported at $46.7 billion, representing a 27% year-over-year gain. Amazon was last to report on July 31, with AWS cloud revenue rising by 16.9% to $29.3 billion.
“This is a good time to be a cloud provider,” John Dinsdale, chief analyst at Synergy Research Group, stated. “Despite being on the verge of becoming a $100 billion per quarter market, cloud revenues are still growing by around 25% per year, and we are forecasting that average annual growth over the next five years will remain above 20%.”
Google Cloud Powering Forward with AI-Led Cloud Growth
Alphabet CEO Sundar Pichai emphasized that Google Cloud’s growing data center footprint is a key part of its success.
“We operate the leading global network of AI-optimized data centers and cloud regions,” Pichai said. “We also offer the industry’s widest range of TPUs and GPUs along with storage and software built on top.”
However, strong demand is creating capacity constraints. To address this demand, Google is increasing its 2025 CapEx guidance by $10 billion to $85 billion, with the majority focused on expanding cloud infrastructure and AI capabilities to serve growing customer needs.
“I think the comprehensiveness of our AI portfolio, the breadth of our offerings, both providing our models on GPUs and TPUs for our customers, all of that has been really driving demand, and so we are investing to match up to it,” he said.
Microsoft Grows Cloud Capacity by More Than 2 Gigawatts
Microsoft also emphasized its data center capacity as key to its cloud success.
“We stood up more than 2 gigawatts of new capacity over the past 12 months alone, and we continue to scale our capacity faster than any other competitor,” Microsoft CEO Satya Nadella said during his company’s earnings call.
The growth is being driven by three key areas: traditional cloud migrations, scaling cloud-native applications, and new AI workloads. Nadella highlighted a significant migration example, noting that Nestle migrated more than 200 SAP instances, 10,000-plus servers, and 1.2 petabytes of data to Azure, calling it one of the largest successful migrations in business history.
Despite the strong growth, demand continues to outpace supply. The company expects to remain capacity-constrained through the first half of fiscal 2026, with capital expenditures expected to exceed $30 billion in Q1 alone.
Importantly, Nadella emphasized that the cloud migration journey is far from complete.
“We are not anywhere close to the finish line, if at best maybe in the middle innings,” he said.
AWS Shows Strong Growth Despite Supply Constraints
Like its rivals, AWS is feeling the pressure of growth on its data center and cloud capacity.
“We have more demand than we have capacity right now. So we could be doing more revenue and helping customers more,” Amazon CEO Andy Jassy said during his company’s earnings call.
The AI opportunity represents a significant growth driver. Key AI developments include the Trainium2 custom chip powering Anthropic’s Claude models and new services like AgentCore for deploying AI agents at scale.
Despite the substantial scale, Jassy remains bullish on long-term prospects and, much like Nadella at Microsoft, still expects more opportunity in the years ahead.
“85% to 90% of worldwide IT spend is still on-premises versus in the cloud,” Jassy said. “In the next 10 to 15 years, that equation is going to flip.”