With earnings right around the corner, Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG) (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) are likely to benefit from “stable” and “healthy” cloud spending, UBS said.
In speaking with 11 customers and partners at Oracle’s (ORCL) AI World event, UBS analyst Karl Keirstead said the tone of the conversations about core cloud infrastructure spending was positive. Spending on artificial intelligence inference and training spending should provide the opportunity for upside as well, he added.
“We see minimal upside to Street estimates for AWS, with more upside potential in Azure and Google Cloud,” Keirstead wrote in a note to clients.
Delving deeper, he said the tone in the conversations was better than it was just three months ago, and the “progression in tone about overall cloud infra spending is notable.”
“While several of the [Fortune 500] enterprises spoke to flattish IT budgets in 2025, none – zero – were planning on incremental spending cuts or delays and in fact some partners said that they began seeing a loosening of budgets in 3Q, an ‘unfreezing’”, Keirstead explained.
“While this diligence focused on the 85-90% of AWS, Azure and Google Cloud revs coming from enterprise customers (‘core’ demand), demand for cloud-hosted GPUs from AI model providers and start-ups remains outstanding, with no obvious slowdown in 3Q25.”
Other notable takeaways from the conversations include the fact that AI-induced pull-through of data software demand should help the hyperscalers and companies such as Snowflake (SNOW).
There is also the belief that Microsoft Azure is taking market share, as three partners said their Azure practices accelerated in the third-quarter or were expected to in the fourth-quarter. Conversely, the partners described their Amazon Web Services practices as “landing slightly below expectations” for the third-quarter, with forecasts of steady in the fourth quarter, Keirstead relayed.
Microsoft and Alphabet are set to report their quarterly results after the close of trading on Oct. 29, while Amazon will report its quarterly figures after the close of trading on Oct. 30.