Google Cloud revenue rose 82% to $24.8 billion in the second quarter, compared with 42% growth to $29.4 billion at Microsoft's Azure and 37% growth to $42.2 billion at Amazon Web Services. The article argues that at these growth rates Google Cloud could pass Azure in quarterly revenue within about a year, with projections of about $45 billion versus about $42 billion. Google Cloud's operating margin rose to 35.6% from 20.7% a year earlier, while Alphabet trades at about 24 times forward earnings, close to its five-year average of 23 times, and the author argues this valuation gives Cloud little credit. The main risk is cost: Alphabet's capital spending doubled to $44.9 billion in the quarter, free cash flow was negative $5.9 billion, and 2026 capex guidance was raised to $195–205 billion, while Google Cloud's backlog reached $513.9 billion at the end of June. This quarter is the first to include rented outside capacity, which management has said will weigh on margins in the near term, and Alphabet and Microsoft both report on Oct. 28.
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Related tickers and likely impact
GOOGL
▲ Likely positiveAlphabet Inc. (Class A)
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Communication Services |
| Industry | Interactive Media & Services |
| Market cap | $4.0T |
| Close on 10/23/2026 | 320.21 |
| Change that session | -1.24% |
MSFT
▼ Likely negativeMicrosoft
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 10/23/2026 | 524.51 |
| Change that session | +0.66% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
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