To The Moon

AI's Best ROI Is the Cloud: Reaccelerating

Since OpenAI launched ChatGPT in late 2022, America's leading large-scale computing companies have been aggressively increasing their capital expenditures, with a primary focus on AI compute power. This trend continued and accelerated in Q2 2025.

Amid a global surge in AI capital expenditures by tech giants, the market has been rife with skepticism, questioning whether AI is a bubble with massive investment yielding little return. Do the facts support this narrative?

Recent earnings reports from the world's five largest cloud vendors suggest otherwise. All have achieved quarter-over-quarter growth, with Microsoft Azure, Google Cloud, Alibaba Cloud, and Oracle OCI posting double-digit gains and accelerating year-over-year growth. This has even sparked debates about the "AI winners" (Azure/GCP) and "AI losers" (AWS) in the cloud space.

~$Amazon.com(AMZN)$  AWS: Revenue reached $30.9 billion in Q2, a 17% year-over-year increase, with growth holding steady from the previous quarter. Quarter-over-quarter growth was 5%. Operating income stood at $10.2 billion, up 9% YoY, but the operating margin declined by 3 percentage points to 33%. Remaining Performance Obligations (RPO) grew 25% YoY to $195 billion.

~$Microsoft(MSFT)$ Azure: Azure's Q2 revenue hit $21.7 billion, soaring 39% YoY, an acceleration of 6 percentage points from the prior quarter, continuing its leadership in growth among the top three global clouds. The Intelligent Cloud segment, which includes Azure, reported revenue of $29.9 billion (+26% YoY) and a record operating profit of $12.1 billion (+23% YoY), achieving a 41% operating margin. Commercial RPO increased 37% YoY to $368 billion.

~$Alphabet(GOOG)$ Google Cloud: Google Cloud's revenue for Q2 was $13.6 billion, a 32% YoY increase, marking a 4-percentage-point acceleration from the previous quarter. The division achieved a record-high operating profit of $2.8 billion and an operating margin of 21%. RPO saw a robust 38% YoY growth, reaching $106 billion.

~$Alibaba(BABA)$ Alibaba Cloud: Alibaba Cloud reported Q2 revenue of $4.7 billion, up 26% YoY, an 8-percentage-point acceleration from the last quarter and its third consecutive quarter of double-digit growth. EBITA profit grew by 26% YoY, with an EBITA margin of 9%.

~$Oracle(ORCL)$  Oracle Cloud Infrastructure (OCI): OCI's Q2 revenue climbed to $3.0 billion, a remarkable 52% YoY increase, accelerating by 1 percentage point from the previous quarter. OCI consumption revenue grew even faster at 62% YoY. Total RPO reached $138 billion (+41% YoY), with cloud services now accounting for 80% of that backlog.

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