Cloud giants pour nearly $600B into capex as AI demand surges

Cloud service providers Amazon, Google, and Microsoft have collectively invested nearly $600 billion into capital expenditures (capex) as demand for artificial intelligence (AI) continues to surge. These cloud giants are rapidly expanding their infrastructure to meet the growing need for computing resources required to train and run AI models.

Amazon disclosed that its AWS division generated $42.2 billion in revenue during the second quarter of 2026, marking a 36.7% year-on-year increase and the company's fifth consecutive quarter of accelerating growth. AWS now holds an annualized revenue run rate of $169 billion, which would place it at 24th on the Fortune 500 list if it were a standalone company.

CEO Andy Jassy expressed confidence in the future, stating that AWS will spend approximately $220 billion on capex in 2026, despite the current shortfall in capacity to meet demand.

Google also increased its capex estimates for 2026, raising its range to $195 billion to $205 billion from the previous estimate of $180 billion to $190 billion. The company's CFO, Anat Ashkenazi, cited the acceleration in capacity delivery to meet growing demand as the primary reason for the increase. Google's cloud revenue saw an 82% increase to $24.8 billion for the quarter, driven primarily by Google Cloud Platform (GCP), with core GCP, AI solutions, and AI infrastructure playing key roles in the growth.

Microsoft reported commercial cloud revenue of $59.3 billion for the quarter ended June 30, representing a 27% increase compared to the same period in the previous year. Azure and other cloud services saw revenue growth of 43%. Microsoft expects to spend approximately $175 billion on capex for calendar 2026, slightly below the earlier estimate of $200 billion.

The company's CFO, Amy Hood, explained that the shift in accounting treatment as more datacenter leases are classified as operating rather than finance leases led to the updated capex forecast. Hood also mentioned that the change does not reflect a reduction in planned infrastructure build-out but rather a shift in lease classification that will impact the company's financial statements.