Combined revenue growth at the three largest cloud providers rose from 48% year over year in the second quarter to 56% in the third. Morgan Stanley sees this as a favorable demand backdrop for infrastructure software earnings, although cloud providers are also intensifying competition in data analytics, databases and AI monitoring.
Since October, consensus forecasts for the five companies’ combined 2028 capital spending have risen 18%; meanwhile, software companies are beginning to see AI efficiency gains, but ServiceNow’s overall growth has yet to accelerate alongside its AI business.
GF Securities believes downstream IT budgets are more likely to turn positive in the first quarter of 2027; Sealand Securities is focused on the recovery of Saiyi Information’s core business and the commercialization of its computing-power projects, with subsequent growth dependent on conditions including new-business expansion and cash flow.
Software budgets are expected to grow 5.3% in 2027, with AI receiving both new funding and money reallocated from existing budgets. But only 17.2% of respondents have achieved measurable enterprise-wide returns; how much revenue cloud, security and application vendors capture depends on deployment costs and actual benefits.
