Within the hyperscaler capex conversation, the key metric is next year’s growth. As it stands, the Street is looking for 23% growth in CY27. That said, whisper expectations have moved higher following Google’s $85B and Amazon’s $25B capital raises, which will be spent predominantly late this year and into next year.

For the sake of simple math, if you assume $80B of Google’s $85B raise goes to next year’s capex and $20B of Amazon’s $25B raise goes to capex, hyperscaler CY27 capex growth lands at 37% y/y. Additionally, I expect a modest increase in Meta’s CY27 capex outlook, which should push its growth to 25% from the current expectation of 21%. The biggest narrative risk in the capex conversation is Microsoft, where I believe management will guide investors to an unchanged 26% growth rate for next year. If three of the four hyperscalers raise their outlook, I believe the AI infrastructure narrative will remain intact. The buildup is outlined below:

The likely standout in June cloud reporting will be Google Cloud, as the company has been the most aggressive among the big three at building out infrastructure, and separately, leveraging its family of models to draw in customers. This translates to our expectation that Google Cloud revenue will hit a staggering 70% y/y in June, compared to Street estimates calling for 64%.

AWS will likely continue its streak of outperformance, driven by demand still outpacing supply despite continued buildout, yielding 34% growth y/y, versus the Street at 32%.

As for Microsoft, the trend of them posting the least upside should continue as we expect growth to come in line with expectations, up 40% y/y.

The bear case is that these results will be viewed as positive, but not enough. My sense is that commentary around September will reassure investors that we’re still early in the AI cloud growth story:

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