In the previous article "Global Cloud Giants Q2: Seeing AI Demand Explode, Continuing to Increase AI Investment," it was noted that cloud giants saw massive demand from AI and continued to increase AI investment. With Alibaba's earnings arriving late, the Q3 scorecards for the five global cloud giants are now in: AI accelerated revenue growth across major cloud providers, AWS and Google Cloud profits exploded, while Azure, with its reduced revenue scope, was constrained by AI compute capacity from growing further.
1
Amazon AWS
Global Cloud Leader
Q3 revenue $27.452B, up 19% year over year, sequential growth rate flat, up 4% sequentially; operating income $10.447B, up 50% year over year, a record high; operating margin 38%, up 8 percentage points year over year.
AWS Q3 revenue accounted for 17% of Amazon's total revenue, contributing 60% of Amazon's operating income.
Q3 AWS revenue run rate $110B; AI revenue run rate reached multi-billions, maintaining triple-digit year-over-year growth, three times faster than early AWS; revenue growth constrained by chip supply; AWS is the first cloud provider to offer H200; Project Ceiba with NVIDIA will configure 20,736 GB200s, delivering 414 exaFLOPS; custom training chip Trainium 2 begins large-scale ramp in a few weeks; Amazon Q saved company teams $260M in development costs; heavy AI investment driven by massive demand visibility; backlog commitments reached $164B, up 23% year over year, average remaining life 3.9 years; from Q1, useful life extended to 6 years, contributing 2 percentage points to AWS operating margin expansion year over year; layoffs and cost optimization also lifted margins; AWS margins will have normal seasonal fluctuations.
2
Microsoft Azure
Second-Largest Global Cloud
Microsoft Q3 narrowed Azure revenue scope; revenue $16.857B, up 33% year over year, growth rate tied with Google Cloud for the lead among the big three clouds.
Azure's parent Intelligent Cloud segment (Server + Azure + Enterprise Services) operating income $10.503B, up 18% year over year, continuing to set records; operating margin 44%. Intelligent Cloud Q3 revenue accounted for 37% of Microsoft total revenue, contributing 34% of Microsoft operating income.
AI contributed 12 percentage points ($1.5B) to Azure growth. This quarter and next remain supply-constrained on AI. Next-quarter consumption growth is expected to be flat. Azure is expected to accelerate in FY25H2 as AI capacity ramps. Azure market share continues to rise; cloud migration is accelerating. Azure Arc now has 39,000 customers, up 80%+ year over year. Microsoft operates data centers in over 60 countries/regions and will be the first cloud provider to offer GB200. Azure OpenAI usage has doubled year over year over the past six months. The non-AI portion contributed 1 percentage point less to Azure revenue sequentially. Azure AI business is primarily inference-driven.
3
Google Cloud
Third-Largest Global Cloud
Q3 revenue $11.353B, up 35% year over year, growth rate up 6 percentage points, leading the big three clouds; operating income $1.947B, operating margin 17%, another record high.
Google Cloud core five businesses: AI infrastructure, Vertex AI platform, BigQuery data platform, AI cybersecurity solutions, Workspace productivity suite; GCP revenue growth again exceeded overall Cloud growth; Workspace revenue grew year over year, driven by ARPU growth; signed world's first commercial nuclear power purchase agreement, 500 MW scale.
Google now generates over a quarter of new code via AI; Gemini embedded in 7 products with 2B+ monthly users; AI Overviews live in 100+ countries/regions, 1B monthly users, monetization rate now consistent with traditional search; Circle to Search on 150M+ Android devices; Lens processes 20B+ visual searches monthly; Gemini API grew nearly 40x in past 6 months; expect search capabilities to significantly improve in 2025.
Google Cloud revenue growth is no longer a question. Management previously guided for year-end YouTube + Cloud revenue run rate >$100B, implying Q4 Cloud revenue around $15B. Previously noted the biggest hope for Google Cloud this year was whether margins could hit 20%—looks like it will, Q3 already at 17%.
4
Alibaba Cloud
China's Cloud Leader
Q3 revenue RMB 26.549B ($3.653B), up 7% year over year; excluding internal consolidation, up 7% year over year; core public cloud businesses including elastic compute, database, and AI continued double-digit year-over-year growth, with AI-related revenue achieving triple-digit year-over-year growth for the fifth consecutive quarter.
Q3 EBITA profit RMB 2.661B, EBITA margin 9%, another record high; profitable for 15 consecutive quarters, driven by high-margin public cloud businesses including AI.
5
Oracle Cloud
Global Cloud Challenger
Q3 revenue $5.623B, up 23% year over year, growth rate up 3 percentage points sequentially; OCI (IaaS) revenue $2.2B, up 45% year over year; SaaS revenue $3.5B, up 10% year over year; IaaS gross margin and operating income continue to climb; non-GPU cloud business growth exceeds competitors; expect FY25 OCI revenue up 52%+ year over year, FY25 capex doubling year over year.
Gen2 infrastructure Cloud driven by LLM training demand explosion, annualized revenue $7.4B, up 44% year over year; OCI consumption revenue up 56% year over year, constrained by supply otherwise higher; cloud database annualized revenue $2.1B, up 23% year over year; RPO $99B, up 53% year over year, cloud PRO up 80%+ year over year, accounting for nearly 3/4 of total RPO; expect OCI to grow quarter over quarter; signed 42 cloud GPU orders this quarter worth $3B.
Oracle currently has 162 cloud datacenters globally, 85 live, 77 under construction; largest Supercluster reaches 2.4 zettaFLOPS peak AI compute next H1, supports 1 GW, including 131,072 Blackwell GPUs; largest live Superclusters have 16,384 H100s, adding 65,536 H200s by year-end, supporting 800 MW; future plans for thousands of datacenters large and small; 7 datacenters linked to Azure/Microsoft, 24 under construction; 4 linked to Google, 14 under construction; Oracle Database launching on AWS in December.
6
DigitalOcean
AWS for Everyone
Q3 revenue $199M, up 12% year over year; ARR $798M, up 12% year over year, AI/ML ARR again up nearly 200% year over year; gross margin 60%, flat year over year; operating margin 12%; monthly ARPU $102.51, up 11% year over year, first time above $100; expect Q4 revenue up 11% year over year, full-year AI/ML to contribute >3 percentage points to revenue growth.
Q3 EBITDA profit $86.7M, up 14% year over year; EBITDA margin 44%; net dollar retention rate held at 97%, still below 100%.
DigitalOcean's distinct characteristic is its primarily SMB customer base (now 638K+), making it highly sensitive to macro cycles; although ARPU continues to rise, customer count has hit a growth ceiling. Previously noted that in the AI cloud wave, facing the rise of new forces like CoreWeave, traditional small cloud player DigitalOcean has been somewhat slow to act—only opened H100 instances to all customers on Oct 1, launched first AI product GenAI Platform in early Nov; company now continuously increasing AI investment, has purchased H200s, preparing to buy Blackwell products next year.
Conclusion
Cloud company capex exploded again this quarter; FAMG Q3 total capex up 58% year over year, setting records for the fourth consecutive quarter, up 11% sequentially. As cloud giants uniformly signal severe AI supply shortages, future cloud capex concentration on GPU servers will keep rising, yet the market persistently views this as overinvestment—a scene reminiscent of the early cloud computing era.
