22 June 2026Global Software, US and China Internet, & US Communications InfrastructureCloud in the Quarter: How did the hyperscalers do in 1Q26?Mark L. Moerdler, Ph.D.+1 917 344 8506mark.moerdler@bernsteinsg.comMark Shmulik+1 917 344 8508mark.shmulik@bernsteinsg.comRobin Zhu+852 2123 2659robin.zhu@bernsteinsg.comMadison Rezaei+1 917 344 8622madison.rezaei@bernsteinsg.comFiroz Valliji, CFA+1 917 344 8316firoz.valliji@bernsteinsg.comShelly Tang, CFA+1 917 344 8342shelly.tang@bernsteinsg.comDeeksha Pandey+1 917 344 8447deeksha.pandey@bernsteinsg.comWenhuan Chang+1 917 344 8546wenhuan.chang@bernsteinsg.comCharles Gou+852 2123 2618charles.gou@bernsteinsg.comNancy Wu+1 917 344 8545nancy.wu@bernsteinsg.comThe hyperscale market has become a picks & shovels basket to support the Generative AIwave even though it was predominantly a CPU driven business. Investors remain concernedabout the CAPEX growth and the associated margins / returns of AI infrastructure investmentas AI becomes a more meaningful contributor to revenues. Suddenly, the laggard inhyperscale appears the leader in AI cloud with Google’s vertically integrated solution nowneck-and-neck with Microsoft for incremental cloud dollars added Q/Q.Even with CAPEX stepping up, CSPs all point to capacity constraints, before it was GPUavailability, but that seems to have shifted to physical powered up datacenter capacity. All thisushers in a slew of new investor questions: Are Microsoft and Amazon going to see a returnon CAPEX? Is speed and cost to bring capacity online the new basis of competition? Do themodel wars determine winners and losers? What are the economics of Oracle’s AI build-out,and can they rely on their OpenAI commitments? Are NVIDIA and OpenAI losers to Google orkingmakers? When will AI drive increased cloud IT budgets? Bernstein's Cloud in the Quarternote, which focuses on the largest hyperscale Cloud providers, should help investors geta better picture of the secular issues and why results may differ between providers. Thisquarter we added another perspective and neocloud data.The hyperscale market is the largest tangible market opportunity in Software / Cloud /Internet ($1.3-1.5T — see Diving into the Cloud TAM) and possibly the largest in all oftech. Bernstein's Global Hyperscale Cloud Team (Global Software, U.S. Internet, and ChinaInternet and now US Comm. Infrastructure) supplies this quarterly note to help pull allthe data together in one place for Amazon, Microsoft, Google, Alibaba Oracle and now aneocloud - CoreWeave.Updating our data through this quarter, today's note looks at the metrics each of thecompanies supply as well as our estimates through Q1 CY2026. The note also supplies ourupdated thoughts on the different companies' hyperscale businesses, where we are on AI,and how the markets and companies are progressing on what we believe is going to be avery long and valuable journey. This is the 21st not...
