WSS: Hyperscale earnings show more growth acceleration with new entrants executing to support neoclouds
The past week saw earnings season move into full swing and the hyperscale category went first. AWS, Microsoft and Google all reported 3Q26 earnings this past week and there were some noteworthy recurring trends. Revenue growth continued to accelerate across all the hyperscale cloud platforms, with AWS nearly hitting 40% y/y growth even as it exited the quarter on a $184b annual revenue run-rate. Microsoft and Google, and Oracle earlier in the reporting cycle, all saw an uptick in the pace of growth as well. Meta also recently reported, and while it does not have a raw cloud infrastructure business, it continues to build out infrastructure capacity to support new initiatives like the emerging Muse service. Other metrics indicative of hyperscale trends are CapEx spending and backlogs. Across the hyperscale category, CapEx spending either held steady or increased, while it was a similar story for RPO numbers. In fact, looking forward as the calendar year comes to a close, hyperscalers are expecting both CapEx to increase and revenue growth to accelerate further. AWS confirmed on its earnings call that it expects the cloud business to grow at 40% y/y or faster over at least the next few years. The confidence in projecting two years out is a function of having visibility into large-load customers buying up to gigawatt-levels of capacity, which need to be committed to months and years in advance. This capacity is largely spoken for, according to Amazon CEO Andy Jassy, but this apparent ‘sold out’ sign should not be understood to be applied to the core cloud infrastructure business at Amazon. We look into the details and explain why this can be a bit misleading. The fact is that core cloud infrastructure continues to grow and capacity will be available. AI tools, services and infrastructure are taking this growth to another level.
Elsewhere in earnings, new entrants – many that came from the crypto world – continue to show they can execute. A few weeks back, Applied Digital brought more capacity online for CoreWeave and in the past week, Galaxy Digital reported its earnings and is doing the same. It executed leases for CoreWeave and is on schedule for its next tranche of capacity, which is expected to come online in the first half of next year. We also looked at American Tower’s earnings report, which included details about the CoreSite data centre business.
In the cloud space, there was some notable product development activity. Akamai rolled out new portfolio additions tailored for AI workloads as it continues to see uptake for cloud infrastructure services, while CoreWeave added security controls. CoreWeave also continued its global expansion efforts. It recently confirmed plans to build infrastructure in India and in the past week brought online capacity in Denmark.
There were also developments of note in western Canada that were on different ends of the spectrum. Uniserve is set to open a 1MW data centre in Vancouver and the Alberta government approved a power plant for Beacon Data Centres for a project that is targeting close to a gigawatt of capacity.
Finally, we published our monthly insights as is customary at the end of every month. We looked at some of the more notable trends, many of which were on display this past week. This included expansion activity in India from neoclouds, execution by new entrants on major developments for AI infrastructure, and the main takeaways from hyperscale earnings. We also looked at customer momentum from the likes of Akamai and Megaport, which is on the rise and speaks to the demand profile for AI-oriented cloud infrastructure, and the rise in inferencing.
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