Key Points
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Amazon is the largest cloud computing company, and AWS revenue has started to accelerate.
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Microsoft has been seeing strong growth, but its internal technology has lagged.
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Alphabet is the most complete AI company, and Google Cloud has been the fastest-growing unit of the big three cloud providers.
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The stocks of the big three cloud computing companies, Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), have had mixed performances in 2026 thus far. Alphabet has led the way with about a 13% return, while Amazon is up nearly 7%, and Microsoft has fallen 20%.
All three companies are seeing strong cloud computing growth and are investing heavily in artificial intelligence (AI) infrastructure to capture the opportunity ahead of them.
Let’s dig into each stock to see which is the best to buy right now.
Amazon
Amazon is the largest cloud provider by market share, having created the infrastructure-as-a-service concept more than 20 years ago with the launch of Amazon Web Services (AWS).
While the company is best known for its e-commerce operations, AWS is actually its most profitable segment. While AWS revenue growth has trailed its two main competitors, it has started to accelerate, increasing 28% year over year in the first quarter. With partnerships in place with Anthropic and, more recently, OpenAI, that revenue-growth acceleration should continue this year.
The company also has a large custom-chip business, including both AI accelerators and central processing units (CPUs). This is an over $20 billion run-rate business or $50 billion when including internal use. It also helps give it a cost advantage by lowering inference costs.
Amazon’s e-commerce business is also performing well and currently experiencing a lot of operating leverage due to its investments in robotics and AI. The stock currently trades at a forward price-to-earnings (P/E) ratio of under 25 times fiscal 2027 estimates.
Microsoft
Microsoft’s Azure cloud computing unit, a big growth driver for the enterprise software giant, has been growing its revenue by 30% or more for 11 straight quarters. This included last quarter, its fiscal Q3, when revenue soared 40% (39% in constant currencies).
Revenue growth is driven by strong demand for compute and AI services, and Microsoft has consistently said demand continues to outstrip supply. Meanwhile, Microsoft has some huge future commitments from OpenAI, and to a lesser extent Anthropic, that should continue to fuel growth in the coming years.
Why the stock has struggled, though, is that it has been behind with its own tech. It has largely relied on OpenAI’s AI models and is behind in developing custom AI chips, instead relying on pricier Nvidia graphics processing units (GPUs). And while Microsoft’s core software business has been performing well, led by increasing adoption of its Copilot AI assistants, there remains an underlying fear in the market that AI will disrupt the software industry.
On its end, Microsoft is trying to catch up with its own tech, both with AI models and chips, and has started to replace some OpenAI models with its own internally developed ones. The stock currently trades at a forward P/E of 17 times fiscal 2027 analyst estimates, and it owns a 27% stake in OpenAI.
Alphabet
Alphabet has the smallest cloud computing unit of the big three cloud providers, but the company also has some of the biggest advantages. It is the most complete AI player, with both a world-class foundational AI model in Gemini and top-notch AI chips with its tensor processing units (TPUs).
Alphabet’s TPUs were developed more than a decade ago and are generally considered best in class among custom AI chips, as the company has optimized its entire ecosystem around them. In fact, Anthropic has placed large orders for these chips, creating another nice high-margin revenue stream. These chips also allow Alphabet to train its models and run inference at a much lower cost than competitors that rely on Nvidia GPUs.
Overall, Google Cloud saw the strongest growth of the big three cloud providers, as revenue surged 63% last quarter. At the same time, Alphabet has incorporated its Gemini model throughout its entire product ecosystem, including Google Search, to help drive growth. Its global ad network then helps it monetize its commercial AI endeavors better than competitors.
The stock currently trades at 24 times 2027 analyst estimates, and it also has a significant opportunity outside of AI in its Waymo robotaxi business.
The verdict
I think all three of the big three cloud computing providers look interesting at current levels. However, I prefer Amazon and Alphabet given their tech advantages over Microsoft.
If I could only pick one right now, I’d choose Amazon, as it trades at a significant discount to its retail peers despite the huge operating leverage it is seeing, which is driving strong profitability growth in its e-commerce segment. Meanwhile, its cloud business is seeing accelerating revenue growth, which could help the stock break out. That said, I personally own both Amazon and Alphabet and think they are great long-term stocks.
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Geoffrey Seiler has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
