AI boom and cloud growth: Tech giants set new standards

The ongoing boom in artificial intelligence (AI) continued to drive strong revenue growth for major US tech companies in the past quarter. Strong cloud business recently provided further tailwinds for Alphabet, Amazon, and Microsoft. With rapidly growing demand for AI applications, demand for storage and computing power is also rising, and with it demand for corresponding cloud solutions.

Thanks to their booming cloud divisions, the tech giants were able to achieve double-digit sales growth in the past quarter. Microsoft’s consolidated revenue grew by 18 percent to $77.7 billion. Microsoft’s Azure cloud division even grew by 40 percent. Overall, the software company increased its profit by 22 percent to $27.2 billion.

Alphabet’s quarterly revenue grew by a surprisingly strong 16 percent to $102.3 billion, exceeding the $100 billion mark for the first time. Of this, $74.2 billion was attributable to advertising revenue, which grew by just under 13 percent. The cloud division grew more than twice as fast to $15.2 billion. Net profit grew by 35 percent.

At Amazon, strong growth in the Amazon Web Services (AWS) cloud division more than offset the weakness in online retail. “AWS is experiencing its strongest growth since 2022,” said CEO Andy Jassy when presenting the figures. The group increased its revenue by 13 percent to $180.2 billion and its profit by 36 percent to $1.95 per share. Although the cloud division accounts for only about 15 percent of the group’s revenue, it contributes around 60 percent to its profit.

Meta benefited from strong advertising business in the past quarter, increasing revenue by 26 percent year-on-year to $51.2 billion. However, quarterly profit shrank by 83 percent to $2.7 billion due to a one-time tax charge of $16 billion.

Tech companies are massively expanding their data centers

The major tech companies have consistently announced further massive investments in the expansion of data centers and server farms for the AI cloud business. Alphabet and Meta recently raised their annual forecasts for investments in computing capacity to $91 billion to $93 billion and $70 billion to $72 billion, respectively. According to Meta CFO Susan Li, the Facebook parent company’s investments could be significantly higher again in 2026.

Microsoft is also focusing more on the cloud business, according to CEO Satya Nadella. The software company is expected to invest $120 billion in expanding its AI infrastructure in 2025, according to Nadella. Microsoft recently booked additional AI computing capacity with cloud provider Iren due to rapidly growing demand. The contract is worth $9.7 billion, Iren announced.

Meta plans to invest $600 billion in US infrastructure and jobs over the next three years to expand its AI infrastructure. “It’s the right strategy to aggressively build capacity in advance so that we are prepared for the most optimistic scenarios,” CEO Mark Zuckerberg said during Meta’s recent quarterly earnings call. The Meta boss has big ambitions to outperform rivals such as ChatGPT developer OpenAI, Google, and Elon Musk’s company xAI in artificial intelligence. To this end, he has poached some experts from competitors with exceptionally high offers.

Nvidia becomes first company worth over $5 billion thanks to pioneering role in AI

The chip manufacturer Nvidia is also continuing to benefit from the AI boom. The company has evolved from a niche supplier of graphics cards to the backbone of the global AI industry. Many AI applications run on Nvidia processors, which were originally developed as graphics chips. Heavyweights such as Alphabet and Meta, but also AI startups such as OpenAI, are filling their data centers with Nvidia chips for training AI algorithms. The chip company thus occupies a key position among semiconductor companies. This is also reflected in the soaring price of Nvidia shares. At the end of October, the chip company became the first to break the $5 trillion mark in market capitalization.

Most recently, Nvidia CEO Jensen Huang has been able to build a good relationship with Donald Trump’s administration. He recently convinced the US president of Nvidia’s exceptional role and scored points with the construction of a factory in the US. Nvidia investors are now eagerly awaiting the presentation of the third-quarter figures on November 19.

Apple posts record sales after strong iPhone launch

Apple also recently reported record sales. Sales were driven primarily by strong initial sales of the new iPhone 17. In addition, CEO Tim Cook gave a surprisingly optimistic outlook for the current quarter in an interview with Reuters. However, due to supply bottlenecks, the electronics supplier was unable to meet some of the demand for smartphones. As a result, growth in this segment fell short of expectations. Apple also continues to suffer from tensions between the US and China. Due to US tariffs on goods from the People’s Republic, the company is currently relocating iPhone production to other countries such as India.

In the final quarter of the 2024/2025 fiscal year, revenue from iPhone sales grew by around 6 percent to $49.03 billion. In contrast, sales of Mac computers and accessories performed better than expected. Total group revenue rose by around 8 percent to $102.47 billion, the highest figure in the company’s history. Profit increased by 13 percent to $1.85 per share. Apple was recently valued at more than $4 trillion on the stock market for the first time.

Tesla earned less, but car sales rose surprisingly

Electric car pioneer Tesla recently continued its series of declining profits. The company, led by Elon Musk, earned a net profit of $1.37 billion, which was 37 percent less than a year earlier. Meanwhile, revenue rose 12 percent to just under $28.1 billion. This exceeded analysts’ expectations. In the third quarter, the final spurt in US subsidies for the purchase of electric cars gave Tesla a sales record after months of declining sales. Deliveries rose 7.4 percent year-on-year to 497,099 vehicles.

Musk had already said he expected a few tough quarters. However, the tech billionaire has been downplaying the importance of car sales for the company for some time. He claims that Tesla’s future lies in robotaxis and humanoid robots. In both areas, however, the company is still in its infancy – and faces a lot of competition.

 

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