Key insights
- Morgan Stanley highlights accelerating growth among hyperscalers (AWS, Azure, Google Cloud) driven by AI workloads, cloud migration, and demand for database/analytics services. This trend is viewed as positive for software firms like Datadog, Snowflake, and MongoDB, suggesting continued strength in the technology sector and potentially boosting investor expectations for upcoming earnings.
Investing.com-- Morgan Stanley said accelerating growth at major cloud providers signals another boost for AI-driven software demand, with analysts highlighting three themes from the latest hyperscaler earnings.
Morgan Stanley analysts saw the key themes as: rising AI workloads, healthy cloud migration trends, and stronger demand for database and analytics services.
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Analysts said aggregate growth across Amazon Web Services, Microsoft Azure, and Google Cloud accelerated for a fourth straight quarter to 39% year-on-year in the first quarter, up from 33% in the prior quarter.
Google Cloud posted the strongest acceleration, growing 63% year-on-year, while AWS revenue growth rose to 28% and Azure expanded 39%.
The brokerage said AI adoption was increasingly complementing traditional cloud consumption rather than replacing it. Amazon linked AI workload growth to broader infrastructure demand, while Microsoft said customers deploying AI applications were also expanding use of other services across its platform.
Morgan Stanley also pointed to continued enterprise migration from on-premise systems to the cloud, with Amazon noting that rising memory and storage costs were becoming an additional catalyst for migration alongside AI adoption.
The analysts said database and analytics products were also benefiting from AI-driven demand. Microsoft’s Cosmos DB business grew 50% year-on-year, driven by AI applications, while Fabric paid customers rose 60%.
Alphabet said usage of BigQuery and Gemini workflows increased more than 30-fold from a year earlier.
Morgan Stanley said the trends were positive for software firms, including Datadog (NASDAQ:DDOG), Snowflake (NYSE:SNOW), and MongoDB (NASDAQ:MDB), though stronger cloud growth could raise investor expectations heading into earnings reports.