Cloud giants' Q2 earnings shine: Azure and Google Cloud become core US stock positions

On July 28, 2026, the three global cloud giants—Microsoft, Google parent Alphabet, and Amazon—released their Q2 2026 earnings. The data shows that driven by the continued explosive growth of artificial intelligence (AI) workloads, cloud computing has become the strongest growth engine for each company. Among them, Microsoft Azure revenue grew 35% year-over-year, and Google Cloud grew 40%, both exceeding market expectations. These impressive figures once again highlight cloud computing as the core foundation of the digital economy, creating valuable entry opportunities for investors.

Microsoft Azure: AI Monetization Exceeds Expectations

Microsoft's earnings show that its Intelligent Cloud segment (including Azure, enterprise services, etc.) generated $306 billion in revenue, up 28% year-over-year, with Azure alone contributing 35% growth. Azure's growth is mainly driven by the rapid adoption of AI inference and training services. Microsoft CEO Satya Nadella said in the conference call, "Azure is becoming the preferred platform for global AI workloads, with a large number of customers including OpenAI and Meta accelerating their migration." In addition, subscriptions for Microsoft's Copilot product line (such as GitHub Copilot and M365 Copilot) increased 40% quarter-over-quarter, driving higher cloud consumption. Analysts point out that Microsoft's strategy of deeply integrating AI capabilities into its ecosystem (Azure, Office, Dynamics) continues to create value, giving it an advantage in the "second curve" of cloud computing.

Google Cloud: Leading Growth, Profitability Turning Point Confirmed

In Alphabet's earnings, Google Cloud was the biggest highlight. Revenue for the quarter exceeded $11 billion, up 40% year-over-year, with operating profit reaching $1.52 billion and a profit margin exceeding 10% for the first time. Google Cloud's growth mainly comes from customized solutions in vertical areas such as AI model training, autonomous driving (Waymo), and gene sequencing. CEO Sundar Pichai emphasized that Google's TPU (Tensor Processing Unit) computing leasing business is highly sought after by enterprise customers, and AI-enhanced features in Google Workspace (such as Gemini-assisted writing) have also increased user stickiness. For years, Google Cloud has been playing catch-up, but with the explosion of AI demand, its deep accumulation in generative AI is rapidly converting into market share.

AWS: Growth Recovers, Price War and Profit Balance

Amazon AWS, the market leader, reported revenue of $28.4 billion in the quarter, up 19% year-over-year, recovering from previous quarters. Although growth lags competitors, AWS still leads in absolute scale. Notably, AWS launched a large number of AI-specific instances (such as Inf2 and Trainium2) this quarter and announced price cuts on some computing resources to compete for high-value customers. However, the price war caused its operating profit margin to drop slightly from 35% to 32%. Amazon's CFO stated that AWS will continue capital expenditure on infrastructure and AI chips to strengthen long-term competitiveness. Overall, with a rich product portfolio and global coverage, AWS remains a solid investment choice.

Industry Trends: AI Cloudification Accelerates, Computing Demand Soars

The earnings of the three giants point to a core trend: AI is moving from proof of concept to large-scale deployment, and enterprise demand for computing power is growing exponentially. According to the latest IDC report, the global cloud computing market is expected to exceed $900 billion in 2026, with AI-related cloud spending accounting for over 40%. This trend directly benefits cloud infrastructure providers while driving investment opportunities in the upstream and downstream supply chain (such as chips, optical modules, and liquid cooling). Notably, Microsoft, Google, and Amazon have all announced additional hundreds of billions in capital expenditure for the second half of 2026 to expand data centers and procure GPUs/TPUs, which will bring sustained orders to chip manufacturers like Nvidia and AMD.

Investment Opportunities and Risk Warnings

• Stock Opportunities: Microsoft (MSFT) has the clearest AI monetization and a relatively reasonable valuation (PE ~35x); Alphabet (GOOGL) has the greatest cloud business elasticity, but antitrust risks need attention; Amazon (AMZN) has dual drivers of e-commerce and cloud, with strong long-term value.
• ETF Selections: Cloud computing-themed ETFs like SKYY, CLOU, and WCLD offer one-click exposure to multiple cloud vendors; AI infrastructure ETFs like BOTZ and AIQ focus on the computing supply chain.
• Risk Warnings: Macroeconomic slowdown may impact enterprise IT budgets; antitrust regulation could pressure big tech; slower-than-expected AI commercialization may lead to market sentiment cooling.

Conclusion

From the Q2 2026 earnings, cloud giants are enjoying structural growth from the AI dividend. Despite lingering concerns over interest rate changes and inflation, the strong cash flows and industry-leading profitability of cloud vendors give them the ability to weather cycles. For long-term US stock investors, gradually building positions in core cloud assets at current valuations is a wise choice to share in the long-term dividends of the digital era.