Google Cloud Grew 82% Last Quarter -- Here's Why Amazon and Microsoft Investors Should Care

GOOG -1.93% NVDA -0.66% MSFT -0.22% AMZN -1.81% Google Cloud just shocked the sleepy cloud services sector out of its slumber.

The Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) subsidiary announced it grew its revenue by 82% year over year last quarter. It grew its operating income by an even more impressive 212% year over year.

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Here's why those numbers threaten to reshape the entire cloud platform hierarchy and why Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) investors should care. A lot.

The cloud services sector is dominated by three players, and those three together control nearly two-thirds of the global cloud services market.

Amazon Web Services has long been the No. 1 player in the space, with Microsoft's Azure a distant second and Google Cloud Platform a distant third. This list has remained unchanged for years. But over the past year, something unusual happened, according to new market data from Synergy:

Data source: Data compiled by Synergy Research and initially reported on by CRN. Chart by author.

Over the past year, Google Cloud Platform has increased its market share by 2%. But the overall share of the market held by the big three didn't change. Instead, Google's market share gains came at the expense of AWS.

For the quarter ended June 30, 2026, Google Cloud's 82% revenue growth dominated. But both AWS and Azure grew their cloud revenue, too.

Microsoft reported that Azure and other cloud services revenue increased by 43% and that revenue in the "Intelligent Cloud" segment (which includes Azure) came in at $39.3 billion. Meanwhile, AWS was close behind with revenue growth of 37% to $42.2 billion.

To be clear, all of those growth numbers are spectacular, especially for companies that are already so large. And all three grew faster than in the prior quarter. AWS' and Azure's numbers look tepid compared to Google Cloud's massive growth.

In the quarter ended March 31, 2026, Google Cloud grew revenue by 63%, Azure by 40%, and AWS by 28%. Amazon CEO Andy Jassy boasted in that quarter that AWS growth was the fastest in 15 quarters. In Q2, he boasted that AWS had grown at its fastest clip in 18 quarters.

And everyone agreed that the growth was due to, in the words of Alphabet CEO Sundar Pichai, "demand for AI infrastructure and AI solutions." So if this AI tide is boosting all three cloud platforms' numbers, why should Amazon and Microsoft investors care that Google is growing fastest?

In order to drive these big revenue boosts, all three companies are spending big on AI infrastructure, including data centers. In fact, they (along with Meta Platforms) have collectively been dubbed "AI hyperscalers." And their capital spending proves it.

Amazon just upped its full-year 2026 capital expenditures (capex) forecast by 10% to $220 billion. Meanwhile, Alphabet raised the midpoint of its full-year capex guidance by about 8.1% to $200 billion. Alphabet's stock was punished by investors in the wake of its earnings announcement, dropping 7% despite its massive Google Cloud growth.

Microsoft, on the other hand, bucked the trend. It announced its calendar-year 2026 capex would remain unchanged at $175 billion after a minor accounting change. And investors rewarded the company by sending shares up 8% in after-hours trading after that announcement.

It seems shareholders are looking at the massive price tags for the AI build-out and questioning whether they will actually pay off for the hyperscalers down the road. While the fast-growing revenue from cloud platform services may be encouraging, it's clear that investors are hoping for more and are willing to sell their hyperscaler shares if they don't get it.

Microsoft, Amazon, and Alphabet shareholders should understand the situation and be prepared for further price volatility in the wake of upcoming earnings announcements.

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John Bromels has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.

Google Cloud Grew 82% Last Quarter -- Here's Why Amazon and Microsoft Investors Should Care was originally published by The Motley Fool