Analysts at UBS expect continued acceleration in cloud infrastructure growth when Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG) report first quarter 2026 results next week, with investor forecasts pointing to robust expansion across all three major hyperscalers despite already elevated expectations.
UBS estimates market expectations for the March quarter cloud revenue growth at roughly 38% to 9% for Microsoft Azure, 29% to 30% for Amazon Web Services (AWS), and 58% to 59% for Google Cloud.
The firm noted that while these growth bogeys are high, they appear broadly achievable given current demand trends, though it cautions that sentiment may be running somewhat ahead of fundamentals in certain areas, particularly Google Cloud.
The outlook is based on recent discussions with enterprise customers and industry partners. “The main dynamic in play is that cloud-hosted GPU (and even CPU) demand is inflecting at an unprecedented pace, a trend not lost on investors such that the stocks of the cloud infra providers are outperforming,” the analysts wrote.
According to UBS, enterprise IT budgets are increasingly shifting toward AI and data infrastructure in 2026, with reduced emphasis on traditional software and services spending.
Cloud providers are reportedly benefiting from stronger prioritization within corporate procurement strategies, alongside growing AI usage intensity among large enterprises.
UBS also highlighted the broadening of AI-related cloud demand beyond raw infrastructure access. Enterprises are increasingly building proprietary AI applications and agents using hyperscaler platforms such as AWS Bedrock and comparable services offered by Microsoft and Google. UBS also referenced continued strong traction in Google Cloud across its customer base.
On the supply side, UBS noted that hyperscalers continue to expand capacity aggressively, with no indication of reduced investment pace despite ongoing constraints in components and rising pricing pressures. In some cases, portions of new infrastructure, particularly at Microsoft, are being directed toward internal or first-party AI workloads, reflecting elevated in-house demand. The analysts suggested that capital expenditure commentary from the upcoming earnings calls is likely to remain firm and could move higher in some cases.
While investor expectations are elevated heading into the results, UBS said underlying demand conditions appear strong enough to support current growth forecasts.
The firm said it maintains a constructive view on cloud infrastructure exposure, characterizing the setup as favourable for companies leveraged to AI-driven compute demand across hyperscale platforms.
