AWS Awesome Q2 Pushes Microsoft into Slow Lane

**Bob Evans** (0:00)
Hello, my friends, welcome back to Cloud Wars Minute. Third hyperscaler reported its numbers late last week. That was Amazon's AWS unit. Fantastic quarter for AWS. Best in four or five years. They had what I call an awesome Q2, and in doing so, we've seen a complete reshuffling of sort of the growth standings among the hyperscalers. And I talk a lot about growth rates here on Cloud Wars because that's an indicator of where the customers are spending their money. Not big deals from two or three or five years ago, but right here, right now, among these great set of competitors, which ones are customers across all different sorts of industries picking to take them into the AI economy. And with this big Q2 from AWS, they have left, they've held last place among the three hyperscalers and growth rates for the last four years. But this time, they completely reset that. And I want to take a look at these here, and then we'll get into a couple of details about the AWS Q2. So right now, AWS reported for Q2 and the June 30th, 37% growth to $42.2 billion.
Microsoft for the same period, their fiscal Q4, grew 27% to $59.3 billion. And again, for the same three months, and the June 30th, Google Cloud, up an incredible 82% to almost $25 billion. Now you can look at these numbers and say, wow, Microsoft is much bigger than either of those. And one of the remarkable things Microsoft did over this long run, for much of that time, it was the number one company on the Cloud Wars Top 10, even at its immense size, it was still growing faster than AWS quite regularly.
While Google Cloud, the smallest of the three, was showing these sort of unusually high growth rates. But the arc of the Google Cloud growth rate, as I've explained, if you look at the last four quarters, it's gone from 34 to 48, 63, 82 So it is surging right now. Microsoft's has been pretty flat. Last quarter ended March 31st, growth rate was 29 percent. So they're down here while AWS went from 28 percent last quarter up to 37 percent this quarter. Now, people can talk about the size of the company, it's easier to grow a small revenue faster than a big one, blah, blah, blah. We all learned that in fifth grade. I think the point here is to show the arc of the ongoing growth rates of these three companies. We see Google Cloud and now AWS on a very nice, continuous upswing while Microsoft has leveled off. Now, again, size, relative size of companies aside, what this tells us is lots and lots of customers right now are picking Google Cloud and also AWS to help take them forward. So inside AWS, in addition to the very nice jump with their Q2 revenue, the backlog soared here up 154% to almost $500 billion.
And Andy Jassy, the CEO of Amazon, former CEO of AWS, said on the earnings call, he detailed it very calmly, confidently, and very clearly. He said, we're going to spend in 2026, $220 billion on CapEx, almost all of which will go toward building data centers necessary to fund this expansion in Cloud and AI. And about half of that, you know, he said, will be from debt offering. So that's been, you know, something that a lot of financial people have, you know, they howled several months ago, and Oracle said it was going to do this. Now we've seen Google Cloud do similar things. AWS is doing it. Wouldn't surprise me if Microsoft did this. Just the new way of how this industry has to operate with these unprecedented size, these backlogs. And if you look at that backlog number I showed, $496 billion, that's the smallest backlog number of the four hyperscalers. Microsoft is around $675 billion.
Google Cloud is $514 billion. Oracle is about $636 billion. So, way over $2 trillion in the combined backlogs for these three companies. And I think, given the size of that opportunity, it is not some crazy idea to think that the CEOs of these companies are saying, we have to get the funds necessary. And now perhaps some through borrowing, not just all through cash flow, to pay these unprecedentedly high capex bills. But also, we're doing that to pursue the biggest opportunity, the biggest TAM the world has ever seen. I think by a very great margin. There's never been in any industry anything like this. I think it's great seeing AWS back in the high growth mode. I think it's good for everybody. It makes the competition better. And it certainly is a great thing for customers who now have choices of fantastic suppliers across the four hyperscalers, AWS, Google Cloud, Microsoft and Oracle. I've got a detailed article pointing out a lot of this comparative tables of what Microsoft, Google Cloud and AWS have done over the past year, their growth, their revenue and so forth and some other insights. Hope you'll check that out on cloudwars.com. Thanks for being with us here at Cloud Wars Minute. I hope you have a fantastic day.