Morgan Stanley analysts reviewed the latest quarterly results from the leading cloud providers and distilled three primary themes that they say reflect the current state of cloud demand.
Accelerating AI workloads
The analysts observed that adoption of AI applications is contributing to increased cloud consumption rather than replacing existing workloads. Aggregate revenue growth across Amazon Web Services, Microsoft Azure, and Google Cloud accelerated for a fourth consecutive quarter, rising to 39% year-on-year in the first quarter from 33% in the prior quarter. Within that group, Google Cloud registered the largest gain, expanding 63% year-on-year. Microsoft Azure grew 39% and Amazon Web Services reported revenue growth of 28%.
Morgan Stanley noted that providers themselves linked AI workload growth to broader infrastructure demand. Amazon described growth in AI workloads as associated with wider infrastructure requirements, while Microsoft reported that customers implementing AI applications were also increasing their consumption of other services across its platform.
Ongoing migration from on-premise systems
The brokerage highlighted continued enterprise movement away from on-premise deployments and toward cloud platforms. Amazon told analysts that, alongside AI adoption, rising memory and storage costs are emerging as an additional incentive for enterprises to migrate workloads to the cloud.
Heightened demand for databases and analytics
Morgan Stanley said database and analytics offerings appear to be benefiting from AI-driven demand. Microsoft’s Cosmos DB business expanded 50% year-on-year, and paid customers for Microsoft Fabric rose 60%. Alphabet reported that usage of BigQuery and Gemini workflows increased more than 30-fold compared with the prior year.
The analysts described these developments as broadly positive for software companies that serve cloud platforms. Morgan Stanley specifically cited Datadog, Snowflake, and MongoDB as software firms positioned to benefit from stronger cloud adoption. At the same time, the brokerage cautioned that accelerating cloud growth could lift investor expectations as corporate earnings season approaches.
Overall, Morgan Stanley’s assessment frames recent hyperscaler results as reinforcing a virtuous cycle: AI-driven workloads boost infrastructure and platform consumption, which in turn supports databases, analytics, and software firms operating in the cloud ecosystem.