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Big Tech AI cloud spend starts translating into earnings signals
Analysts point to accelerating cloud demand, including JPMorgan’s view that cloud bookings now exceed $2.3 trillion and Azure revenue crossing $100 billion in annual sales.
With US stocks at new highs, Wall Street strategists are increasingly linking Big Tech’s AI spending to improving earnings outcomes, focusing on megacap hyperscalers and their cloud businesses, according to Yahoo Finance.
Truist chief investment officer Keith Lerner told Yahoo Finance he is seeing evidence that spending is feeding through to earnings. JPMorgan also raised its S&P 500 price target to 8,000 from 7,800 last week, citing not only strong earnings and upward guidance revisions but also demand for cloud services.
The report highlights momentum across major cloud providers. Microsoft’s Azure recorded record cloud revenue last quarter, with the business topping $100 billion in annual sales for the first time, while Amazon’s AWS growth reached 36.7% in the quarter, its fastest in 18 quarters. Alphabet’s cloud growth is described as “explosive,” and Meta is also considering renting out some computing capacity, with JPMorgan strategist Dubravko Lakos-Bujas arguing that monetization may ramp faster than spending as demand catches up.
Bank of America research cited by Yahoo Finance says cloud computing backlogs for the top four providers exceed $2.3 trillion, up 16% from the first quarter. Despite expectations that free cash flow will remain negative in FY27 for most hyperscalers, the companies’ AI build-outs are expected to drive further capex, with projections of about $725 billion to $760 billion in spending this year.
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