AI as a Consumption Multiplier
AI is not merely a new service; it is a fundamental re-engineering of the cloud consumption model. Microsoft and Google are sustaining 30-40% growth rates because every AI interaction in their software-as-a-service (SaaS) layers triggers a secondary layer of infrastructure revenue . For instance, AI services contributed 13 to 16 points of Azure’s total growth throughout 2025 . This “synergistic consumption” means that software usage directly fuels backend infrastructure demand, creating a flywheel effect that competitors find difficult to replicate.
Vertical Integration of Custom Silicon
Strategic advantage is increasingly shifting toward custom silicon designed to bypass the high costs of general-purpose GPUs. Amazon’s custom chips business, including Graviton and Trainium, has achieved an annual revenue run rate of over $10 billion, with Trainium units growing at triple-digit percentages. By designing its own processors, AWS can offer price-performance ratios that are 20-40% better than generic hardware, protecting its 35% operating margins even as competition intensifies.
Model-Agnostic Neutrality
While Microsoft and Google are vertically integrated with specific models (OpenAI and Gemini), AWS is positioning itself as the “neutral ground” via Amazon Bedrock. Bedrock has reached a multi-billion dollar annualized run rate, with customer spend up 60% quarter-over-quarter. This strategy allows AWS to capture revenue from a broad range of enterprise AI workloads regardless of which individual LLM wins the market, effectively becoming the “AI utility” for the entire industry.