After four years of being the slow-growth player behind Google Cloud and Microsoft, AWS delivered outstanding Q2 results across the board last week with its 37% Q2 growth rate thrusting Microsoft (27%) into the laggard spot 10 points behind AWS and 45 behind Google Cloud’s 82%.
This is a huge achievement for Amazon CEO Andy Jassy and AWS CEO Matt Garman, who have diligently not only returned the cloud category-king to the high growth levels of its storied past but also created an AI and chip powerhouse.
Here’s a quick overview of the most-impressive Q2 numbers behind AWS’s striking acceleration:
- revenue up 37% to $42.2 billion;
- backlog up 154% to $496 billion;
- AI business hitting $25 billion in annualized run rate;
- chip business reaching $25 billion in annualized run rate; and
- Jassy confidently disclosing — and clearly explaining — why he’s comfortable with Amazon boosting 2026 CapEx spending to $220 billion, including about half of that total through debt offerings.
“AWS is now a $169 billion annualized revenue run-rate business, which, for perspective, would place it 24th on the Fortune 500 list if it was a standalone company,” Jassy said in his opening remarks on the Q2 earnings call last week.
| Q2 ’26 | Q1 | Q4 ’25 | Q3 | Q2 | |
|---|---|---|---|---|---|
| Google Cloud | |||||
| Growth rate | 82% | 63% | 48% | 34% | 32% |
| Revenue | $24.8B | $20B | $17.7B | $15.2B | $13.6B |
| MSFT Cloud | |||||
| Growth rate | 27% | 29% | 26% | 26% | 27% |
| Revenue | $59.3B | $54.5B | $51.5B | $49.1B | $46.7B |
| AWS | |||||
| Growth rate | 37% | 28% | 24% | 20.2% | 17.5% |
| Revenue | $42.2B | $37.6B | $35.6B | $33.0B | $30.9B |
It’s interesting to note that while AWS is the smallest of the three Amazon divisions — North America, International, and AWS — Jassy has chosen in each of the last two earnings calls to showcase the AWS business at the top of his opening remarks. While all three units are growing, the breakout acceleration from AWS has clearly inspired Jassy to flag it as the growth engine of the entire sprawling corporation ($200 billion in total Q2 revenue).
“Customers choose AWS because we offer the broadest capabilities. They want their AI inference to reside near their other applications and data, and more of it resides in AWS than anywhere else,” Jassy said on the call before describing the powerful interplay between his company’s cloud portfolio and AI portfolio.
“And because AWS has the strongest security and operational performance, we’re seeing strong growth across both AI and non-AI, what we call core, and growth in one is driving growth in the other. Growth in AI drives core because post-training reinforcement learning, and agent tool use is mostly done on CPUs versus AI accelerators,” Jassy said.
That creates a market advantage for AWS in Jassy’s view because its Graviton chip offers “up to 30% to 40% better price-performance” over other CPUs.
And then, in a comment sure to stir up some reactions within Multicloud Database partner Oracle, Jassy said, “You need a place to store this AI data and to run vector databases, which are also emblematic of a meaningful edge for AWS because we have the broadest and most capable functionality by a fair bit in these core infrastructure areas.”
Okay, given the giddiness surely pervading the AWS organization following its stellar Q2 results, we have to cut the guy a little slack for puffery. But there’s no puffery of any kind in AWS’s Q2 numbers, which have not approached this level of strength in several years.
Relative to much-larger rival Microsoft, we have to go all the way back to calendar Q3 of 2022 to find the last quarter in which AWS grew more rapidly than Microsoft, when AWS revenue grew 27.5% while Microsoft Cloud revenue rose 24%.
In the intervening four years, Microsoft wrested the “king of the cloud” title away from AWS by not only growing more rapidly but also by doing so on a much larger revenue base, a dynamic that is still very much in place: for the quarter ended June 30 (Microsoft’s fiscal Q4), Microsoft Cloud revenue of $59.3 billion is 40% larger than AWS’s $42.2 billion.
Side note: as I’ve chronicled Google Cloud’s extraordinary acceleration over the past year — quarterly growth of 34% a year ago and then 48%, 63%, and for Q2 82% — many commenters have trotted out the flaccid truism that “it’s easier to post high growth rates on a relatively small revenue base.” Okay, granted that we all mastered that idea in 5th grade, let’s think about what the high growth rates mean and why it’s a major focus of ours here at Cloud Wars: in a market stuffed with high-quality cloud and AI vendors, high growth rates reflect the vendors *customers* are choosing, and in which they’re investing their companies’ futures.
Final Thought
So, what happened to market behavior in Q2 to flip the growth fortunes of AWS and Microsoft? What are we to make of this Q1-to-Q2 comparison, which has nothing to do with relative revenue totals: from Q1 to Q2, Google Cloud’s growth rate increased from 63% to 82%, and AWS’s growth rate increased from 28% to 37%, but Microsoft’s decreased from 29% to 27%?
There are lots of ways to spin that, and no doubt some people will trot out those hollow “apples versus oranges” tropes. But the simple fact is that in the boomiest of boom times in the Cloud Wars, over the same three-month period, customer demand for both Google Cloud and AWS accelerated significantly while customer demand for Microsoft slackened.
And spin aside, customers are the ultimate truth-tellers.
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