The fight between cloud companies has gotten much more intense in Q2 2025 (April through June), with AI driving big changes. Amazon Web Services (AWS), Microsoft, and Google Cloud are spending billions on AI as they compete for customers. Their recent earnings reports show who’s growing and who’s struggling.
Let’s look at how the three big cloud providers are doing, where they’re growing, and what problems each faces in this AI-changed market.
AWS still makes the most money in the cloud, but they’re having some real problems this quarter. While still number one, they’re watching their competitors catch up fast.
AWS made $30.9 billion in net sales in Q2 2025, with a good operating income of $10.2 billion. While the numbers remain impressive, their operating margin dropped to 32.9%. Even with this decline, AWS still makes more profit per dollar of revenue (operating margin) than competitors like Google Cloud.
However, the company’s growth is slowing relative to its main competition. They only grew 17.5% compared to last year, compared to Microsoft Azure’s 39% and Google Cloud Platform’s 32% for the same period. This means competitors are successfully gaining market share.
On top of that, AWS is dealing with capacity limits — it has more customers asking for services than it can serve right now, and the same is true for Microsoft and Google. AWS has a $195 billion backlog, which means customers have already committed to spending that much with AWS over the coming years. However, the company cannot deliver all that demand as fast as customers want, meaning it cannot fully cash in yet.
Investors want to know when AWS’s AI spending will pay off. People are watching the returns closely, and the drop in return on assets worries some investors. Analysts are questioning if their custom chip strategy — especially their Trainium chips — will work out. Since margins are a bit lower, AWS needs to show it can keep innovating and maintaining its lead.
Microsoft is doing really well this quarter, and its OpenAI partnership is helping them grow quickly and close the gap with AWS.
Microsoft’s Intelligent Cloud division (which includes Azure) made $29.9 billion, almost as much as AWS. The division also made the most profit among the three cloud giants at $12.1 billion.
While the broader Intelligent Cloud segment grew 26% compared to last year, Azure itself grew by 39%. That’s more than twice AWS’s growth rate and shows Microsoft is taking a bigger share of the market.
A lot of Azure’s growth comes from AI services, especially those related to their OpenAI partnership. Customers want AI services like ChatGPT that run on Azure, and this has been a primary driver of new revenue and customer adoption. This partnership has put Microsoft in a great spot to benefit from the AI boom.
Microsoft’s fast AI growth creates its own problems. Like AWS, Microsoft is running into supply constraints. They can’t build infrastructure fast enough for all their customers, and executives say these supply problems will likely continue into the first half of fiscal year 2026.
Google Cloud is growing faster than the other top providers this quarter. Their investments are finally paying off with both faster growth and better profits.
Google Cloud earned $13.6 billion, growing 32% compared to last year — faster than both AWS and Microsoft. Their main cloud services are growing even faster at nearly 40%.
Just as impressive is their financial turnaround. Operating income came in at $2.8 billion, and the operating margin improved to 20.7 percent.
Its project backlog now exceeds $250 million in future customer orders. To keep gaining share, Google Cloud has to build and ship products well and deliver reliably, quarter after quarter. The main challenge is keeping up this performance against two bigger competitors.
Google’s long-term plan to deliver reliably is to work through a network of certified partners. You can choose the partner that fits your business and get extra value from their hands-on help. Revolgy is a Google Premier Partner.
All of this is happening in a market that is still growing fast. As of Q2 2025, AWS holds about 30 percent of the global cloud market, Microsoft is at about 20 percent, and Google Cloud is at about 13 percent.
Demand for generative AI is pushing a huge wave of investment.
Together, the three plan to spend about $240 billion in 2025 alone to build more data centers and AI capabilities. In just the last quarter, they spent a combined $87 billion.
What’s interesting is that this investment is much larger than the immediate returns. AI-related services are expected to bring in only about $25 billion in 2025, or roughly 10% of what they’re spending. This shows how strongly these companies believe AI is the future of cloud computing.
By revenue, AWS is still in front. Microsoft looks strongest on growth and profits, helped by Azure’s 39 percent growth and the OpenAI partnership. Google Cloud is catching up, with the fastest acceleration and better margins, especially in core GCP.
Expect tight capacity and choose regions carefully. You can often get better pricing or credits by committing to specific AI services or GPU capacity. Design for portability, and plan now for Gemini, OpenAI, or multi-cloud.
Revolgy helps you plan, implement, and run AI on the cloud. As a Google Cloud Partner, we design portable architectures, help set up multi‑cloud, run hands-on Gemini training, and build custom AI tools tailored to your teams. Get in touch with us for a free consultation.