UBS Highlights Positive Cloud Trends Ahead of Earnings

With Q3 earnings for the major tech giants just days away, UBS analysts are turning more optimistic about the cloud spending outlook for Amazon, Google, and Microsoft.

Analyst Karl Keirstead shared insights from discussions with 11 customers and partners at Oracle’s (ORCL) AI World conference, describing the tone around core cloud infrastructure spending as “stable and healthy.”

AI Spending Offers Additional Upside

Keirstead noted that spending on AI inference and training workloads continues to provide incremental upside for the hyperscalers.

“We see minimal upside to Street estimates for AWS, with more upside potential in Azure and Google Cloud,” he wrote in a note to clients.

Improving Sentiment Across Enterprises

The analyst highlighted that sentiment has improved since mid-year:

Conversations were more positive than three months ago.
Fortune 500 firms expect flat IT budgets in 2025, but no further cuts or delays.
Some partners reported a “loosening of budgets” and an “unfreezing” of enterprise spending in Q3.

This suggests that core cloud demand — which accounts for 85–90% of AWS, Azure, and Google Cloud revenues — remains resilient.

AI-Driven Demand Remains Robust

UBS also observed continued strength in AI-related demand, especially for cloud-hosted GPUs used by AI model developers and startups, with no visible slowdown in Q3 2025.

Winners and Sector Trends

Microsoft Azure appears to be gaining market share, as several partners reported accelerating demand in late Q3 and expected continued growth into Q4.
Amazon Web Services (AWS) was described as “slightly below expectations”, but steady.
Google Cloud continues to benefit from AI data integration and software pull-through.
The AI-driven boom in cloud data workloads is also benefiting companies like Snowflake ($SNOW).

Earnings Schedule

Microsoft ($MSFT) and Alphabet ($GOOG, $GOOGL) will report earnings after market close on October 29.
Amazon ($AMZN) is set to report after the close on October 30.