Citi: Big Four Cloud Providers' Revenue Growth Accelerates to 50%, AI Monetization Outpaces Capital Expenditure

According to TechFlow Research, Citigroup's July 31 research report shows that the combined revenue of the four major cloud providers in Q2 was $103.8 billion, up 50% year-over-year, further accelerating from 41% in the previous quarter. Microsoft Azure increased by 43% (previous quarter 39%), Amazon AWS increased by 37% (previous quarter 28%), Google Cloud increased by 82% (previous quarter 63%), and Oracle OCI increased by 92% (previous quarter 81%). AWS share remains first at 41%, while Google Cloud share rose from 22.6% to 24%. AWS AI business annualized revenue reached $25 billion, a significant increase from $15 billion in Q1. Capital expenditures rose simultaneously, with the four major cloud providers' single-quarter capex increasing by about $20 billion quarter-over-quarter. AWS profit margin was 39.4%, and Google Cloud profit margin was 35.6%, both exceeding market expectations. AWS backlog reached $496 billion (up 154%), and Google Cloud backlog reached $514 billion (up $408 billion). Citigroup believes the AI monetization logic is being validated, with revenue growth outpacing capital expenditure growth. Citigroup maintains Buy ratings on Microsoft, Amazon, Google, and Oracle, with target prices of $600, $350, $447, and $330, respectively.