Hyperscalers: Amazon Leads the Charge, Microsoft Gains Momentum

The hyperscaler space is witnessing strong growth in cloud revenue, and Amazon (AMZN) is leading the charge. With its market share-leading infrastructure-as-a-service concept and partnerships with OpenAI and Anthropic, Amazon's cloud computing business is accelerating rapidly.

A major advantage for Amazon is its proprietary custom-chip business, which includes Trainium AI accelerators and Graviton CPUs. This helps reduce internal build costs and saves money on inference, giving the company a significant edge in the future.

Microsoft (MSFT) has been a concern in the cloud computing space due to its reliance on OpenAI, lack of internal AI models and chips, and fear that AI could undermine its core software business. However, after strong earnings reports, it appears Microsoft is making progress and has significant commitments from OpenAI.

On the other hand, SpaceX (SPCX) trades at an 'otherworldly' valuation, with a forward price-to-sales ratio of 39 times 2026 analyst estimates. While its cloud unit is growing, the company's pricing appears unsustainable in the long term, and it faces significant technical hurdles in putting data centers in space.