Google is enjoying rapid growth in the cloud market, beginning to threaten Amazon and Microsoft (MSFT), the No. 1 and No. 2 players. The company has also begun selling its in-house Tensor Processing Unit (TPU) chips in earnest in the artificial intelligence (AI) semiconductor market, positioning itself as a challenger to Nvidia (NVDA) and AMD. With its chatbot model "Gemini" cracking the stronghold of OpenAI's ChatGPT, Google is pursuing a full-stack strategy across every AI segment, growing into a top-tier player in each area.
While Google's share price has soared on explosive growth, Facebook parent Meta (META) has been shunned by investors amid stagnant and declining social network service (SNS) user numbers. Despite ramping up AI infrastructure investment, Meta's shares have plunged on concerns that it lacks a clear edge over competitors. As the competitive hierarchy among Big Tech firms in the AI market begins to emerge, stock price trajectories are diverging.
Google Cloud Grows 63% in Q1; Amazon Leads at 28%, Microsoft at 30%
On Thursday on the New York Stock Exchange, Google parent Alphabet (GOOGL) closed up 9.96 percent. In contrast, Nvidia fell 4.63 percent, Microsoft dropped 3.93 percent, and Meta slid 8.55 percent. Given that the Nasdaq Composite rose 0.89 percent that day, the divergence among these companies was particularly stark. Amazon (AMZN) opened lower but closed higher, though its gain of 0.77 percent trailed the Nasdaq index.
What split the share price trajectories of major tech stocks were the earnings from Alphabet, Amazon, Microsoft and Meta released after the market close on Wednesday. Wall Street gave high marks to Google's growth trajectory, while Nvidia, Amazon, Microsoft and Meta were seen as facing a crisis in the face of Google's advance.
Alphabet said its first-quarter revenue rose 22 percent from a year earlier to $109.9 billion (about 163 trillion won). The figure exceeded Wall Street's estimate of $107.2 billion and marked the highest quarterly growth rate since 2022. Earnings per share (EPS) came in at $5.11, roughly double the market estimate of $2.63.
The cloud segment's growth was particularly notable. Google Cloud's revenue surged 63 percent from a year earlier to $20.02 billion. Cloud segment operating profit also reached $6.6 billion, triple the $2.2 billion from a year earlier. Revenue from Google Search and related businesses rose 19 percent to $60.4 billion, while YouTube advertising revenue reached $9.88 billion. Paid monthly active users (MAU) of the enterprise AI model "Gemini Enterprise" rose 40 percent from the fourth quarter of last year, and the number of individual paid subscribers to YouTube, AI and other services jumped to 350 million. "Enterprise AI solutions became the core driver of cloud growth for the first time in the first quarter," Google CEO Sundar Pichai said. "Our AI investments and full-stack approach are delivering results across every part of our business."
Amazon, the world's largest e-commerce company, disclosed that its first-quarter revenue rose 16.6 percent from a year earlier to $181.5 billion (about 269 trillion won). This too exceeded the market estimate of $177.3 billion. Net profit came to $30.3 billion, nearly double the $17.1 billion from a year earlier. The figure included $16.8 billion in pre-tax non-operating gains from its investment in Anthropic, maker of the AI model "Claude." EPS reached $2.78, well above the estimate of $1.64.
As with Alphabet, the segment that drove overall earnings was Amazon Web Services (AWS), the cloud service, whose revenue rose 28 percent year-on-year to $37.6 billion. Amazon said AWS posted its highest growth rate in 15 quarters. The annualized revenue of its in-house-designed chip business, including Graviton and Trainium, also topped $20 billion with triple-digit growth. Revenue from its North American and international e-commerce segments rose 12 percent and 19 percent, respectively, while retail sales growth reached 15 percent, the highest since the COVID-19 pandemic. Amazon forecast second-quarter revenue of $194 billion to $199 billion, above the Wall Street estimate of $188.9 billion. It guided second-quarter operating profit of $20 billion to $24 billion, suggesting the figure could come in below the market estimate of $22.65 billion. "The road ahead for Amazon is very optimistic," Amazon CEO Andy Jassy said.
Full-Stack AI Strategy Rapidly Narrows Gap With Leaders; Dominates Ecosystem From Gemini to TPU and Android
Microsoft, the world's largest software company, said on the same day that its third-quarter fiscal 2026 (January-March) revenue rose 18 percent from a year earlier to $82.89 billion (about 123 trillion won). This too exceeded the Wall Street estimate of $81.39 billion. Net profit jumped 23 percent to $31.78 billion, and EPS came in at $4.27, above the market estimate of $4.06. Net profit included a $14 million non-operating loss from its OpenAI investment.
Cloud revenue rose 29 percent during the period to $54.5 billion. Of that, revenue from the intelligent cloud segment, including the flagship "Azure" business, rose 30 percent to $34.7 billion. The productivity and business processes segment, which includes Office software, also rose 17 percent to $35 billion. "We are focused on delivering the cloud and AI infrastructure that helps every company maximize performance in the era of agentic computing," CEO Satya Nadella said.
At first glance, all three companies appeared to post strong earnings, but the market saw it differently. Investors focused most on the fact that Google, the third-ranked player in the cloud industry, posted growth that overwhelmed Amazon and Microsoft, the No. 1 and No. 2 players. Given that Google Cloud's growth rate of 63 percent far exceeded AWS's 28 percent and Microsoft Azure's 30 percent, investors gave Alphabet high marks. Although Google's revenue of $20.02 billion is smaller than Amazon's $37.6 billion and Microsoft's $34.7 billion, the narrowing gap with the leaders stood out more. Google's share of the combined cloud revenue of the three companies rose from 16.9 percent in the first quarter of 2024 to 18.0 percent in the first quarter of last year and 21.7 percent in the first quarter of this year, while AWS's share fell from 44.1 percent two years ago to 40.7 percent. Google Cloud's operating profit surged more than sixfold from $900 million in the first quarter of 2024 to $6.6 billion in the first quarter of this year.
As Pichai noted, these results stem from a full-stack strategy that pursues growth across every AI segment, from Gemini to TPU. Google became a firmly established leader in both the AI model and chip markets beginning with the launch of "Gemini 3.0" on November 18 last year. On top of that, it dominates "Android," the world's largest mobile operating system (OS), the app ecosystem built on it and the YouTube advertising market. This clearly distinguishes Google from AWS and Microsoft, which lack comparable AI model and semiconductor capabilities. Amid Google's fierce challenge, AWS has recently brought OpenAI's ChatGPT into its ecosystem alongside Anthropic. Microsoft, in contrast, has given up its exclusive agreement with OpenAI and begun cooperating with Anthropic.
Head-to-Head Battle With Nvidia in Chips and OpenAI in AI Models; Meta Shocked by Declining SNS Users
Google's growth is not limited to the cloud segment. At its Wednesday earnings call, Google disclosed that it had begun selling TPUs directly to some customers. It has begun full-scale competition with Nvidia and AMD in the AI chip market as well. This was a major factor behind Nvidia's 4.63 percent share price drop on Thursday.
TPU is Nvidia
