Day: October 31, 2025

• Amazon, Microsoft, and Google dominate the cloud market with unprecedented scale and growth.
• These tech giants leverage cloud services for quick returns on massive infrastructure investments.
• Meta lacks a similar cloud strategy, affecting its financial performance and shareholder confidence.

I told you in July that there have never been companies like these. I was talking about tech giants, including Apple, Amazon, Google, Meta, Microsoft, and Nvidia. Most of the Magnificent 7.

After this week, I’m narrowing the group to three. My friend, who’s a cloud-computing veteran, called this group “AMG.” That’s Amazon, Microsoft, and Google.

These are the largest cloud providers by far. This business has reached a scale that the world has never seen before. It creates a powerful financial loop that builds momentum almost every quarter.

• To get in the game, you must spend billions of dollars building data centers and buying technical gear.
• Once you’ve done that, you can rent computing power, storage, and other valuable services out to companies, governments, and developers.
• That revenue comes back relatively quickly, and it’s profitable. You take a portion of that income and funnel it back into building more data centers and buying more gear.
• That makes your cloud service bigger and better, attracting more paying customers, and the circle continues.

This is what makes “AMG,” or Amazon, Microsoft, and Google, more special than other tech giants.

Take Meta, for example. While it’s also spending billions of dollars on data centers and technical gear, it doesn’t have a cloud service, and therefore lacks a clear way to get a quick return on this heavy investment. This is part of the reason Meta shares slumped this week. CEO Mark Zuckerberg doesn’t have a clear enough answer (yet?) for how all this infrastructure investment will pay off for Meta shareholders.

In contrast, AMG has an answer to these questions. On Thursday, Amazon reported $33 billion in cloud revenue and $11 billion of cloud profit. In just one quarter. That’s a 35% profit margin, which is very healthy for a gargantuan operation in a competitive business.

Get your head around these charts

The charts below show how unprecedented this AMG phenomenon is, courtesy of analysts at Barclays.

First up is capital expenditures. Everyone has done this chart this week, so it shouldn’t be that surprising. It’s still kinda shocking in terms of sheer dollars. AMG accounts for most of this:

Next up is AMG cloud revenue. The ramp here is stunning. Amazon Web Services is still the cloud boss.

Third chart: Growth rates. It’s extremely rare for businesses of this size to continue growing at rates of 20% or more. While AWS lagged recently, it topped the 20% bar again in the third quarter, stoking a huge stock rally on Friday.

The final chart is my favorite. This shows the dollar growth rate of these AMG cloud businesses, or how much each company has added in dollar revenue over the preceding 12 months. It’s a common metric on Wall Street known as TTM, or trailing 12 months.

This chart reveals which cloud giants have been growing the fastest in raw dollar terms (rather than % terms, which can sometimes make smaller cloud providers appear more successful).

The latest data shows that Microsoft Azure is growing the most, based on this dollar metric. And you can also see how AWS’s growth rate has slowed, relatively speaking, since the pandemic boom:

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